What Car Expenses Can You Claim at Tax Time?

Drive for work? Here's what you need to know about claiming vehicle expenses this financial year.

As tax time approaches, many Australians are looking for ways to maximise their deductions — and if you use your car for work purposes, there’s a good chance you can claim some of your expenses. Whether you’re a sales representative zipping between clients or a part-time educator working across multiple sites, the Australian Taxation Office (ATO) allows you to claim vehicle-related costs, provided they’re work-related and you haven’t already been reimbursed by your employer.

Who Can Claim?

If you use your own car to travel between two work locations, you’re eligible to claim expenses — even if the vehicle is owned or leased by someone else, so long as you are out of pocket for running costs like fuel.

Let’s say you’re travelling between schools, hospitals, construction sites, or client locations on the same day — those kilometres count. What doesn’t count, generally, is your daily commute from home to work and back — unless special conditions apply (more on that below).

What Counts as a “Car”?

The ATO defines a car as:

• A vehicle that carries less than one tonne of payload
• Seats fewer than nine people, including the driver

However, if you use a motorcycle, minibus, or a larger American-style ute, you may still be able to claim expenses, though different rules apply. The important point: if you’re using a vehicle for legitimate work travel and not being reimbursed, you may be eligible to claim.

When You Can Claim Travel from Home

The ATO does allow claims for travel between home and work in specific cases, such as when:

• Your home is considered your base of employment, and you start duties there
• You’re engaged in itinerant work (e.g., you don’t work at a fixed location)
• You’re transporting bulky or essential equipment for work and: The equipment is crucial for your job It’s bulky or cannot be safely stored at work You have no option but to carry it to and from home
• The equipment is crucial for your job
• It’s bulky or cannot be safely stored at work
• You have no option but to carry it to and from home

How to Claim: Two Methods

1. Cents-Per-Kilometre Method

This is the simpler option. For the 2024–25 financial year, you can claim:

• 88 cents per kilometre
• Up to 5000 kilometres per year
• No need for receipts, but you must record: Date of travel Distance Destination Purpose of the trip
• Date of travel
• Distance
• Destination
• Purpose of the trip

Use a paper diary or the ATO’s free myDeductions app for record-keeping. This method includes fuel, maintenance, insurance, registration, and depreciation all in one rate.

2. Logbook Method

Ideal if your work travel is frequent and consistent.

To use this method:

• Record every work-related trip over a 12-week period
• Include: Odometer readings (start and end) Date and destination Purpose of the trip
• Odometer readings (start and end)
• Date and destination
• Purpose of the trip

The logbook data is valid for five years, but you’ll need fresh records if you change jobs or move house.

This method allows you to claim:

• A percentage of running costs (fuel, servicing, etc.)
• Depreciation based on the proportion of business use

Records can be kept on paper or digitally using the ATO’s app.

Don’t Forget: Car Allowances Are Taxable

If you receive a car allowance from your employer, it’s likely considered taxable income. Make sure it’s included in your return. But don’t worry — you may still claim work-related car expenses to offset that income.

Final Word

Claiming your car expenses at tax time can significantly reduce your tax bill, especially if you use your vehicle for work regularly. But it’s crucial to follow the ATO’s rules closely and keep clear, accurate records.

🚗 Tip from Tynan Motors: If you're planning to upgrade your vehicle for business or personal use, we have a wide range of tax-effective leasing and financing options available across all our dealerships.

This article is general in nature and does not constitute financial advice. Always consult a tax professional to assess your individual circumstances.

Ensure you search the Tynan stock through our link here.

Credit: CarSales.com.au