If you are claiming a deduction for using your own car (including a car you lease or hire), it is treated as a car expense.
If you use someone else's car for work purposes, you may be able to claim the direct costs (such as fuel) as a travel expense.
If the travel was partly private, you can claim only the work-related part.
In this section:
When you can claim for car expenses
You can claim a deduction for work-related car expenses if you use your own car in the course of performing your job as an employee, for example, to:
- carry bulky tools or equipment
- attend conferences or meetings
- deliver items or collect supplies
- travel between two separate places of employment (for example, when you have a second job)
- travel from your normal workplace to an alternative workplace and back to your normal workplace or directly home
- travel from your home to an alternative workplace and then to your normal workplace or directly home (for example, if you travel to a client's premises)
- perform itinerant work.
If you receive an allowance from your employer for car expenses, it is assessable income and the allowance must be included on your tax return.
When you can't claim for car expenses
Most people can't claim the cost of travel between home and work because this travel is private.
Calculating your deduction
There are four different methods for claiming work-related car expenses when using your own car, or one you leased or hired under a hire-purchase agreement.
The four methods are:
You may need to make some adjustments to your claim if the car is jointly owned.
If you use a borrowed car or a vehicle other than a car for work purposes, you can claim the costs you incur (such as fuel costs) as a travel expense. You can't use any of the methods described here to calculate your claim.
Cents per kilometre method
- Your claim is based on a set rate for each business kilometre.
- You can claim a maximum of 5,000 business kilometres.
- You don't need written evidence but you need to be able to show how you worked out your business kilometres (for example, by producing diary records of work-related trips).
Where you and another joint owner use the car for separate income-producing purposes, you can both claim up to a maximum of 5,000 kilometres.
12% of original value method
- Your claim is based on 12% of the original cost of your car or 12% of its market value at the time you first leased it.
- The cost or value is subject to a car limit for the year you first used or leased the car.
- Your car must have travelled more than 5,000 business kilometres in the income year (or, if you used the car for only part of the year, it would have travelled more than 5,000 business kilometres had you used it for the whole year).
- You don't need written evidence but you need to be able to show how you worked out your business kilometres.
As a joint owner, you can deduct your share of 12% of the cost of the car. For example, where there are two joint owners, you can each claim a deduction of 6% of the cost of the car.
One-third of actual expenses method
As a joint owner, you can deduct one-third of your share of jointly incurred expenses and depreciation, and one-third of expenses wholly incurred by you.
- Your claim is based on the business-use percentage of the expenses for the car.
- Expenses include running costs and decline in value but not capital costs, such as the purchase price of your car, the principal on any money borrowed to buy it and any improvement costs.
- To work out your business-use percentage, you need a logbook and the odometer readings for the logbook period.
- You can claim fuel and oil costs based on either your actual receipts or you can estimate the expenses based on odometer records that show readings from the start and the end of the period you had the car during the year.
- You need written evidence for all other expenses for the car.
Owned or leased cars
You can claim a deduction for using a car that you owned, leased or hired under a hire-purchase agreement using one of the four deduction methods .
You may not be considered to own or lease the car if your do not make financial contributions such as the initial purchase, lease, hire-purchase agreements, and loan or lease payments – even though you pay for expenses such as registration, insurance, maintenance or other running costs.
This does not stop you from claiming a deduction for the expenses you pay, but you cannot use any of the four deduction methods.
If you have a family or private arrangement where you are effectively the owner of the car, even if you are not the registered owner, we will treat the car as if you owned it and you can claim expenses. For example, we would allow you to claim for a family car that was given to you as a birthday present, even if it was not registered in your name, if you used it as your own and you paid all the expenses.
- Calculating your deduction