How to Claim Car Related Tax Deductions

If you use your car for work purposes, you're entitled to claim the costs related to this – but only if you personally own the car you are using for this work. If your car is owned by your employer or is part of your salary package, then you are unable to claim anything.  

If you do own your car, then there are two methods you can use to claim any car-related expenses:

METHOD 1: CENTS PER KILOMETRE

• Your claim by this method is based on a set rate for each business kilometre you travel. Under this method you are eligible to claim up to a maximum of 5,000 kilometres per year, per vehicle  

• If you travel in excess of 5,000 kilometres this method of claim may not be appropriate to you. You may be better off using the logbook method.

• The claim value is calculated by multiplying the total business kilometres traveled  (limited to 5,000 per vehicle) by the standard rate of 85 cents per kilometre for the 2024 tax year (this will increase to 88 cents per kilometre for the 2025 year). This figure takes into account all the vehicle running expenses (including depreciation)

• You do not need written evidence, however you need to be able to demonstrate that you have covered the kilometres claimed. A diary of work-related journeys (including the kilometres traveled) will suffice.

METHOD 2: LOGBOOK

Your claim by this method is based on the business use percentage of each car expense. This is determined by a log book that must have been kept for at least a 12 week period, and must be updated every five years. Through your logbook you can claim all expenses that relate to the operation of the car at your percentage of business use

The logbook must record all business journeys made in the car over the 12 week period that it records, detailing:

• When the log book period begins and ends

• The car's odometer readings at the start and end of the period

• The total kilometres traveled

• The business percentage for the logbook period

​​For each journey in the logbook, you must record:

• Date of journey

• Odometer readings at the start and end of the journey

• Kilometres  traveled

• Reasons for the journey

• If you make two or more journeys in a row on the same day you can record them as a single journey

 

You will need to keep all receipts throughout the year to justify your claim, such as insurance, servicing and repairs. Petrol can be estimated using the start and end odometer readings for the year, indicating the total kilometres traveled.

Depreciation is calculated as 25% of the written down value of the car (using the 'diminishing value' method).

Remember, if your car is provided by your employer, or is part of your salary package, you cannot claim any of the costs. 

If you use someone else's  car or  another vehicle  (that is not defined as a car) for work purposes, you will not be able to use the set rate method to claim your expenses. You will be able to claim your business use percentage of the actual expenses you incurred. You will need receipts for all expenses (including fuel) and you will need to establish your business use percentage (from a logbook or some other record).

Vehicles that do not fit the definition of a car include:

• Motorcycles

• Vehicles with a carrying capacity of:   

                     º One tonne or more (such as a utility truck or van)

                     º Nine passengers or more (such as a minivan).

WHAT YOU CANNOT CLAIM

You cannot claim the cost of normal trips between home and work because that travel is private, even if:

• You do minor tasks on the way to work, such as picking up the mail

• You travel back to work for a security call out or parent teacher interviews

• You work overtime and no public transport is available to use to get you home

We have log books and travel record cards available for you to use to keep the necessary records - just ask at one of our offices!

This information sheet is intended as a guide for H&R Block clients. All actual detail and circumstances differ, so please discuss your situation with an H&R Block Tax Consultant. Use one of our tax saver envelopes to keep all your receipts and documents for the year. Remember – if you are not sure if you can claim an expense, keep the receipt and we will ensure that we claim all allowable deductions and rebates for you whilst preparing your tax return.

H&R Block is Australia's largest network of tax accountants with over 400 offices. Every year we help thousands of Australians achieve a better taxation result. For your nearest office call 13 23 25.