For most of us, the costs associated with owning a car take up a big chunk of our personal income. It’s an inevitable cost to increase the efficiency of performing everyday tasks. When you use your car in the course of performing work activities, you are able to claim a tax deduction for these work-related car expenses. For example:

  • Deliveries and pick-ups
  • Travel to meetings and conferences
  • Travel between workplaces (even for separate sources of income)

This DOES NOT include travel between work and home as this travel is considered to be private.

If you receive a motor vehicle allowance from your employer, this will be reported as assessable income from your PAYG Payment Summary and your work-related car expenses will be claimed as a deduction against this income.

If you do not own or lease the car directly, you are still able to claim running costs that you pay for in relation to performing work-related activities under travel expenses.

To calculate your tax deduction for work-related car expenses, the ATO provide two methods from 1 July 2015, being:

  • Cents per kilometre method

Based on a fixed rate of 66c/km

Limited to a maximum claim of 5,000 kms

No written evidence is required but you may need to show how you worked out your business kilometres

  • Logbook method

Based on your business-use percentage of the car

Claimable expenses include car running costs and depreciation

Written evidence is required for all expenses, as well as a logbook to be kept for odometer readings for a minimum continuous period of 12 weeks (must be completed once every 5 years)

The prior 12% of original value and 1/3 of actual expenses methods have now been eradicated.

If you are unsure of your car deduction entitlements, feel free to contact one of our friendly tax team members by emailing or calling our office on 03 9996 0145.

Ashleigh Robertson