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Car Expenses

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Written by

BERIVAN DUBIER
Last Updated Jun 3, 2021
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What’s under the bonnet?

If you use your own car for work purposes (this may be a car you own, lease or hire under a hire-purchase agreement), you can claim a deduction using either the cents per kilometre method or logbook method.

You can claim a deduction for car expenses if you use your car to:

green check perform your work duties
green check attend work-related conferences or meetings away from your normal workplace
green check travel directly between two separate places of employment if neither of the places is your home
green check travel from your normal workplace to an alternative workplace and back to your normal workplace
green check travel from your home to an alternative workplace and then to your normal workplace
green check perform itinerant work – meaning you had shifting places of employment (for example, you regularly worked at more than one site each day before returning home).

Remember

  • You can’t claim a deduction for the cost of trips between home and work under any of the methods, even if you live a long way from your usual workplace or work outside normal business hours.
  • In limited circumstances you can claim the cost of trips between home and work, where:

– your home was a base of employment (that is, you were required to start your work at home and travel to a workplace to continue your work for the same employer)
– you had shifting places of employment (that is, you regularly worked at more than one site each day before returning home)
– you were required to carry bulky tools or equipment for work and all of the following conditions were met

  •  The tools or equipment were essential for you to perform your employment duties and you didn’t carry them merely as a matter of choice.
  • The tools or equipment were bulky – meaning that because of their size and weight they were awkward to transport and could only be transported conveniently by the use of a motor vehicle.
  • There was no secure storage for the items at the workplace.
  • If your travel is partly private, you can only claim the work‑related part.
  • You can’t claim a deduction if you have been reimbursed for your expenses.
  • You can only use one of the methods to calculate your deduction for car expenses.
  • If you claim car expenses for more than one car, you can choose to use a different method to calculate your expenses for each car.
  • If you claim a work-related car expense using the cents per kilometre or logbook method, you can’t claim any further deductions in the same tax return for the same car.
  • If you use someone else’s car for work-related purposes, you can only claim a deduction for actual expenses, such as fuel, in the work-related travel expense section of your tax return. Cars owned or leased by someone else may include a spouse, family member or employer. However, if you can show there is a family or private arrangement that made you the owner or lessee (even if you are not the registered owner) you can calculate your car expenses using either the logbook or cents per kilometre method.
  • A vehicle is not considered a car if it is a motorcycle or a vehicle that:
    • has a carrying capacity of one tonne or more, such as a ute, truck or van
    • can transport nine passengers or more, such as a minivan.

For these vehicles, you can only claim a deduction for actual expenses you incur when you travel for work (such as fuel). Claim your deduction as a work-related travel expense in your tax return. We recommend keeping a logbook for these vehicles as an easy way to show how you calculated your workrelated use of the vehicle. You must also keep records of all of
your actual expenses.

For more information, visit https://www.ato.gov.au/tax-and-super-professionals/for-tax-professionals/prepare-and-lodge/tax-time/tax-time-toolkits/tax-time-toolkit-small-business/small-business-guides/travel-expenses

What’s under the bonnet?

Cents per kilometre method

  • You can claim a maximum of 5,000 work-related kilometres per car using this method.
  • You can claim 91 cents per kilometre for the 2026-27 financial year(72 cents per kilometre from 1 July 2020).
  • The cents per kilometre rate incorporates decline in value, registration and insurance as well as maintenance, repairs and fuel costs. You can’t add these expenses on top of the rate when calculating your deduction.
  • You need to be able to show how you worked out your work‑related kilometres (for example, by producing diary records of work-related trips or using the myDeductions tool in the ATO app to track your work trips).
  • You will also need to have evidence that you own the car.

Logbook method

  • Your claim is based on the work-related percentage of expenses for the car.
  • Expenses you can claim include running costs and decline in value.
  • You can’t claim capital costs, such as the purchase price of your car, the principal on any money borrowed to buy it and any improvement costs (for example, adding paint protection
    and tinted windows).
  • To work out your work-related percentage, you need a logbook and the odometer readings for the start and end of the logbook period. Your logbook period needs to show a continuous, representative 12-week period.
  • You can claim actual expenses you incur for fuel and oil costs using your receipts or you can calculate these expenses based on odometer records that show readings from the start and the end of the period you used the car during the year.
  • You need written evidence for all other car expenses, including evidence that you own the car and odometer readings at the start and end of the period you used the car during the year.

 

Keeping a logbook

Your logbook must cover at a minimum 12 continuous weeks. If you started using your car for work-related purposes less than 12 weeks before the end of the year, you can extend the 12-week period into the next financial year.

Your 12-week logbook is valid for five years. However, if your circumstances change (for example, if you change jobs or move to a new house) and the logbook is no longer representative, you will need to complete a new 12-week logbook.

If you are using the logbook method for two or more cars, keep a logbook for each car and make sure they cover the same period.

You can keep an electronic logbook by using the myDeductions tool in the ATO app or keep a paper logbook.

Below is an example of the details you need to keep.

Car details

Car Expenses

Calculate your work-related car use (Complete this section after 12 continuous weeks of logbook use.) Logbook period (dd/mm/yy to dd/mm/yy)

a. Calculate the total number of kilometres travelled during the logbook period:
b. Calculate the number of kilometres you travelled for allowable work-related trips during the logbook period:
c. Calculate the work-related use by dividing the amount at (b) by the amount at (a) then multiply this figure by 100.

Your work-related percentage is:

Once you’ve calculated your work-related percentage, multiply it by your car expenses to calculate your claim. The myDeductions tool in the ATO app can be used to record work-related car trips as well as any car expenses.

You can share your myDeductions records directly with your agent at tax time. For more information, visit https://www.ato.gov.au/online-services/online-services-for-individuals-and-sole-traders/ato-app/using-mydeductions/mydeductions

Helpful tip:

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Keep accurate records of your business travel, including logbooks and receipts where required. Only claim expenses that relate to earning your income and use the appropriate calculation method. Good record-keeping throughout the year will make tax time much easier.

BERIVAN DUBIER

DIRECTOR

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SEAN DWYER

DIRECTOR
CPA and financial adviser for over 25 years. Loves to help businesses grow. Dad, jogger, cyclist, windsurfer and bad skier.

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FAQ

When can I claim car expenses for work?
You may be able to claim the work-related use of a car you own or lease when you incur the cost while performing your employment duties. Examples include travel between workplaces or to an eligible work-related meeting away from your regular workplace. Keep a record of the purpose and distance of each trip, and exclude private travel.
Can I claim my drive between home and my usual workplace?
Generally no, even if the trip is long, outside normal hours or made after doing some work at home. Limited exceptions can apply, such as genuinely itinerant work, a home that is a base of employment, or the necessary transport of bulky work equipment where secure storage is unavailable. The facts of the work arrangement matter.
What are the two ways to calculate a claim for my own car?
For an eligible car you own or lease, you can generally choose the cents per kilometre method or the logbook method for each income year. The first uses a set rate for work kilometres, capped at 5,000 kilometres per car. The second applies a representative work-use percentage to actual eligible car costs. You cannot combine both methods for the same car and year.
What is the cents per kilometre rate for 2026–27?
The ATO rate is 91 cents per work-related kilometre for the 2026–27 income year, up to 5,000 kilometres per car. This rate already allows for running costs and decline in value, so you cannot add fuel, registration, insurance or depreciation for that car on top. The rate changes between years; use the rate for the return you are preparing.
Do I need receipts or a logbook for the cents per kilometre method?
You do not need a 12-week logbook or receipts for each running cost under this method. You must still be able to show how you worked out your eligible work kilometres. A diary, appointment records, trip records or the ATO app can help support the distance and work purpose; a guess or an automatic 5,000-kilometre claim is not enough.
How does the logbook method work?
Keep a logbook for at least 12 continuous weeks that represents your normal pattern of work travel, then calculate work kilometres as a percentage of total kilometres in that period. Apply that percentage to actual eligible car expenses, supported by records, and keep annual odometer readings. A logbook can generally be used for five years while it remains representative; a material change in usage may require a new one.
Can I claim an expense my employer reimbursed?
No. You cannot deduct a car expense to the extent your employer reimbursed you for it. A car allowance is different: it is generally included in your assessable income, and you may separately claim eligible work-related car expenses that you actually incurred and can substantiate. Check the payslip and payment arrangement before preparing the return.
Do the car methods apply to a motorcycle, heavy ute or someone else’s car?
The cents per kilometre and logbook methods are for a qualifying car you own or lease. A motorcycle, a vehicle with a carrying capacity of at least one tonne, or one built to carry nine or more passengers is treated differently; work-related actual costs and records may be relevant. For a car owned or leased by someone else, the expenses you can claim also differ. Check the vehicle and ownership position first.

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