Motor Vehicle Deductions

Since 1 July 2015 there are only two methods available for claiming a deduction for motor vehicle expenses:

  • Logbook, or
  • Cents per kilometre

All motor vehicle claims need to be supported by documentation & written evidence, which could take the form of a diary note or logbook. Our recommendation is that you should compile a logbook for all business-related motor vehicle use. Generally the logbook method can provide a greater benefit than the ATO rate on the cents per kilometre method.

Cents Per Kilometre Method

If you use the cents per kilometre method you can only claim a maximum of 5,000 business-related kilometres travelled per vehicle. The ATO sets the rate each year, which is currently 85 cents per kilometre for the 2023-24 financial year. This method does not allow you to claim any of the running costs of the car or the depreciation of the car’s value. You will need to provide evidence of how you calculated your business-related kilometres.

Log Book Method 

Under the logbook method you can claim the business-use percentage of all running costs and depreciation on the vehicle, based on the logbook records of your car’s usage. The business-use percentage is the percentage of kilometres you travel in your car for business-related purposes.

Keeping a logbook makes it easy to calculate your business-use percentage for your tax return claim, and it also allows you to substantiate your claim by providing the necessary evidence required by the ATO.

A logbook must be kept for a minimum and consecutive 12 week period. Once the logbook is completed it remains valid for 5 years, unless your work circumstances or your car-use changes significantly.

What to Record in the Logbook

The logbook should detail:

  • The opening odometer reading for the start of the 12 week period
  • For each business-related trip:
  • Date of trip
  • Destination to and from
  • Distance travelled in kilometres
  • Purpose, e.g. client meeting, site visit, etc
  • The closing odometer reading for the end of the 12 week period

You can buy a logbook from most stationery stores or newsagents, or use our spreadsheet template available to download here. There are now also a number of apps available for recording logbook details, including the myDeductions tool provided by the ATO. The myDeductions app can be downloaded here or through the Apple App Store.

What Trips are Deductible

Please note you cannot claim the cost of travelling between your home and your place of business. If your home is your place of business, you can generally claim the cost of trips you make between your home and other places, if you made the trip for business purposes.

Examples of what trips may be deductible are below:

  • Office or place of work to sites, meetings or other business activities (e.g. post office, bank) – deductible
  • Office or place of work to other places of work – deductible
  • Sites, meetings or other business activities to office or place of work – deductible
  • Sites, meetings or other business activities to home – deductible
  • Home to sites, meetings or other business activities – deductible
  • Home to office or place of work – not deductible
  • Office or place of work to home – not deductible

What Car Costs are Deductible 

If you choose to use the log-book method you will also need to keep records, such as receipts, bank statements or written evidence, of all your car running costs each year. These costs can include, but are not limited to:

  • Fuel
  • Repairs and servicing
  • Insurance
  • Registration
  • Interest on a motor vehicle loan or hire purchase agreement
  • Lease payments
  • Depreciation for financed or hire purchased vehicles up to the luxury car tax limit. There is no depreciation on leased vehicles

You can download a spreadsheet to record all the above motor vehicle expenses from our website here.

 


Disclaimer

This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.