If your vehicle expenses are directly related to your work, you can claim them as a tax deduction.
Here’s an overview of what you need to know about claiming vehicle expenses.
When can you claim vehicle expenses?
According to the Australian Taxation Office (ATO), your vehicle or travel expenses must be directly connected to your work in order to make a claim.
If a journey is for private and work-related purposes, you can only claim the latter component.
Work-related vehicle expenses are deductible if you use your own car while 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 workplaces
- 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
- Undertake itinerant work.
What you can claim
If you use your own car for work, whether leased or hired, you can claim car expenses associated with the travel.
If the vehicle belongs to another party, you may be eligible to claim costs, such as fuel, as travel expenses.
When are you not eligible to claim vehicle expenses?
Private travel, such as trips between home and work, is not generally claimable.
Claiming as a business
Your business structure and whether you receive Personal Services Income will affect your claim.
Companies or trusts can claim a full deduction for expenses incurred in running a vehicle they lease or own.
Fringe Benefits Tax may be applicable to employees using the vehicle privately.
Sole traders or partnerships can claim a full deduction for a business-purpose vehicle when there is limited private use.
They may also claim a deduction for the business use of a vehicle they own, lease or hire.
How to claim
You can use the cents per kilometre method (up to 5000 business kilometres per vehicle) or the logbook method to make a claim.
Expenses associated with servicing and petrol are factored into the claims. Refer to the ATO website for further details about claiming.
Logbooks need to be kept for 12 weeks and are valid for five years, or until the vehicle is replaced.
Find a trusted accountant to do your tax
At LDB, we guide you through your tax claims and provide expert advice about tax deductions related to vehicles.
To find out more, please phone LDB on (03) 9875 2900 or fill in the contact form below and one of our tax specialists will get in touch with you.
