Tax Dos and Don’ts for Your Car Claims This EOFY
Tax time is here — and while it’s not as thrilling as picking out a new car, it could still put some cash back in your pocket.
If you use your car for work, chances are you’re entitled to claim certain expenses on your tax return. But beware — not all trips and purchases are deductible, and the ATO is keeping a close eye on dodgy claims. To help you stay on the right side of tax law this EOFY, here’s a handy guide to the dos and don’ts of car-related tax claims.
🚦 The Don’ts: Common Mistakes to Avoid
1. Claiming Your Daily Commute
According to Ladies Finance Club founder Molly Benjamin, one of the biggest no-nos is claiming your regular trip from home to work.
“You can’t claim your regular commute, even if you work long hours or carry some tools,” Benjamin says.
However, there are a few exceptions — if you carry bulky, essential work equipment, and:
- The tools are vital to your job
- They are too large or heavy to carry easily
- No secure storage is available at work
- You’re not taking them home by choice
In that case, you may be able to claim the travel.
2. Not Keeping Proper Records
A good tax return needs solid documentation. No logbook or diary? You might be in trouble.
“If you don’t have a logbook or notes showing where you went and why, the ATO might deny your claim,” says Benjamin.
Use the ATO myDeductions app, a paper logbook, or a diary to track every work-related trip — and hold onto your receipts!
3. Overestimating Work Usage
ATO audits are increasingly data-driven — so rounding up kilometres just won’t cut it.
“Some people guess or round up their kilometres,” Benjamin warns. “But now the ATO wants accurate numbers you can back up.”
4. Claiming 100% for a Car You Also Use Personally
Even if you mostly use your vehicle for work, you can only claim the work-related percentage.
“Trying to claim 100% when it’s used personally can get you into strife,” Benjamin adds.
5. Assuming a 1-Tonne Ute Is Fully Deductible
Accountant and Ladies Finance Club Ambassador Diana Todd says many tradies believe that buying a big Ute automatically qualifies them for full tax deductions.
“But under ATO rules, full deductions only apply if the vehicle carries more than one tonne, and even then, you need to keep receipts and a logbook,” Todd explains.
6. Thinking a Business Logo = Full Deductibility
Putting your company logo on the side of your car does not make all running costs tax-deductible.
“That used to be a thing — maybe 30 or 40 years ago,” says Todd. “These days, that only applies to uniforms.”
7. Trying to Claim the Full Cost of a Luxury Car
Buying a $150,000 luxury vehicle for work? You can’t claim the whole thing.
The ATO has a car cost limit for tax purposes. For the 2024–25 financial year, the maximum is $69,674 (inc. GST) — and even then, only the business-use percentage is deductible.
“The rest stays on your balance sheet. You can’t deduct the full amount,” Todd explains.
✅ The Dos: What You Can Claim
If you’ve got a valid 12-week logbook, you can claim the business-use percentage of:
- Fuel
- Repairs and maintenance
- Registration and insurance
- Depreciation (vehicle cost over multiple years)
- Vehicle extras (dash cams, tinting, etc.)
- Loan interest (if applicable)
Alternatively, if you don’t have receipts or a logbook, the cents-per-kilometre method is a simple option.
💰 2024–25 Fixed Rate:
- 88 cents per kilometre
- Up to 5,000km per car
- No receipts required — but you must show how you calculated the distance
This method covers fuel, servicing, insurance, rego, and even depreciation.
Final Thoughts
Getting your tax return right can save you money — and a headache. Stick to what’s legitimate, keep good records, and only claim what you’re entitled to. If in doubt, always seek advice from a registered tax agent or accountant.
🔧 Tynan Motors Tip: If you're upgrading your vehicle for work or need a reliable car for business travel, our team can help you find a tax-smart solution — from fuel-efficient sedans to fleet-ready utes.
This article contains general information and does not constitute financial advice. Please consult a tax professional for advice tailored to your individual circumstances.
Ensure you search the Tynan stock through our link here.
Credit: CarSales.com.au