What car expenses can you claim at tax time?

Do you visit different sites as part of your job, but your employer is not paying you to travel between those work sites?

Maybe you’re a hard-working sales rep, or you could be a part-time kindergarten assistant working in two nearby pre-school centres on the same day.

Whatever the case, if you’re using your own car to reach a work site or you lease a car, you’re entitled to be reimbursed for the car’s running costs driving between points A and B, provided both points are work addresses and you’re not reimbursed by your employer for that travel.

And you can claim the costs even if you’re driving a car belonging to someone else, according to the Australian Taxation Office (ATO), as long as you’re actually out of pocket replacing the fuel purchased by the vehicle owner.

According to the ATO, a car is defined as a vehicle that carries a payload less than one tonne and seats fewer than nine passengers (or eight passengers and the driver, to be precise).

You may claim expenses for a vehicle that isn’t defined as a car, in the case of a minibus, one of the larger American pick-up trucks or a motorcycle, to offer three examples.

The ATO spells out the circumstances in which you can legitimately claim expenses for using your own car to drive between work sites. There’s also a brief video you can watch if that’s more your style.

In the event that you are claiming the car as an expense for your business, rather than as a private individual, there’s more pertinent info to check out on the ATO’s website.

As a private vehicle owner, and provided you are driving between two or more work-related destinations during the day, you are eligible to claim expenses on your tax return at the end of the financial year.

The ATO won’t recognise claims for driving between home and work (and return), unless there are extenuating circumstances, which are summarised below.

When you can claim expenses driving from home:

There are two ways of calculating what you’re owed: the ‘cents per kilometre’ method and the ‘logbook’ method.

The ATO goes into some detail on this subject. But in summary, you can claim up to 5000km of travel per year using the cents per kilometre method, and for the 2024-25 financial year you will be reimbursed 88 cents for each kilometre travelled during the past financial year. This rate is reviewed by the ATO each financial year and adjusted as necessary.

This amount covers not only fuel, but other running costs – maintenance and repairs – as well as registration, insurance and vehicle depreciation.

The ATO accepts this method of calculating your claim without receipts, provided you record each trip in a diary or using the ATO’s myDeductions tool, an app downloaded to your smartphone.

In addition, the taxpayer is required to supply proof of vehicle ownership – typically a copy of the car’s registration paperwork.

For the logbook method, the taxpayer can claim running costs and depreciation. As the name of the method indicates, the driver making the claim must keep accurate records in a logbook over an unbroken period of at least 12 weeks during the first year.

The ATO’s web page on the subject explains at great length how the logbook is to be completed, but briefly, each record must provide odometer readings at the start and end of each journey, the destination and the reason for travel. Multiple journeys undertaken on a single day can be concatenated (linked) in the logbook as a single entry.

This is an easier method to use if your travel rarely varies and you’re visiting the same work sites each week over an extended period.

The data you record in the logbook is valid for five years and can carry over for the subsequent four years with odometer readings for just the start and the end of the 12-week period, noting also the percentage of travel that is work-related.

In the event that you move house or take a different job elsewhere, you will have to commence a new logbook for that specific financial year.

As with the cents-per-kilometre method, you can maintain hard-copy records, or enter the information using the ‘myDeductions’ app.

Finally, should you receive a car allowance, that is likely considered by the ATO to be taxable income, and it must be included in your gross salary for the year when you are preparing your tax return.

This article contains general information only. Seek independent financial advice that considers your own circumstances.

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