Methods of Claiming Vehicle Tax Deductions

Types of Motor Vehicles

The type of motor vehicle you drive can affect how you calculate your claim.

For tax purposes a motor vehicle is either a "car" or an "other vehicle".

Car

A 'car" (for income tax purposes) is a motor vehicle that is designed to carry both a load of less than one tonne and fewer than nine passengers.
Many four wheeled drives and some utes are classed as cars.

Cars are subject to the car depreciation limit - Other vehicles are not.

Only cars (owned by sole traders or partnerships) can use the cents per km method or the 12 week logbook method.

Only cars using the logbook method can estimate fuel costs - other vehicles must use actual costs based on receipts

For "Other vehicles" you cannot use the cents per km method and are not required to keep a complying logbook.
You can use a diary or journal to separate private use from business use.
Claims must be for actual costs for expenses incurred based on receipts.

Cars owned by companies and trusts also cannot use the cents per km method.
Similarly, claims must be for actual costs for expenses incurred based on receipts.

 Other Vehicle

If your Motor vehicle is not a car it's classed as an "other vehicle".
Other vehicles include motorcycles, and vehicles designed to carry either nine or more passengers or designed to carry loads of one tonne or more.

Load carrying capacity can be calculated by subtracting Unladen Vehicle weight (Kerb weight) from Gross Vehicle Weight (GVM).

 1 Tonne =1000kg

The following types of vehicles (including four-wheel drive vehicles) are cars: 

 

1. Motor cars, station wagons, panel vans and utilities (excluding panel vans and utilities designed to carry a load of one tonne (1,000 kg) or more)
   
   
2. All other goods-carrying vehicles designed to carry less than one tonne (1,000 kg), and
   
   
3. All other passenger-carrying vehicles designed to carry fewer than nine occupants.

In the table below:

 

> small car means a car that is powered by:
	(a) an engine (other than a rotary engine) with a capacity that does not exceed 1600 cm3 (i.e. 1.6 litre); or
	(b)a rotary engine with a capacity that does not exceed 800cm3
> medium car means a car that is powered by:
	(a) an engine (other than a rotary engine) with a capacity that exceeds 1600 cm3 but does not exceed 2600 cm3; or
	(b)a rotary engine with a capacity that exceeds 800cm3 but does not exceed 1300 cm3
> large car means a car that is powered by:
	(a) an engine (other than a rotary engine) with a capacity that exceeds 2600 cm3; or
	(b)a rotary engine with a capacity that exceeds 1300cm3

              

Year of income	Cents Per Kilometre
	Small car	Medium car	Large car
2023-24	85.00	85.00	85.00
2022-23	78.00	78.00	78.00
2021-22	72.00	72.00	72.00
2020-21	72.00	72.00	72.00
2019-20	68.00	68.00	68.00
2018-19	68.00	68.00	68.00
2017-18	66.00	66.00	66.00
2016-17	66.00	66.00	66.00
2015-16	66.00	66.00	66.00
2014-15	65.00	76.00	77.00
2013-14	65.00	76.00	77.00
2012-13	63.00	74.00	75.00
2011-12	63.00	74.00	75.00
2010-11	63.00	74.00	75.00
2009-10	63.00	74.00	75.00
2008-09	63.00	74.00	75.00
2007-08	58.00	69.00	70.00
2006-07	58.00	69.00	70.00
2005-06	55.00	66.00	67.00
2004-05	52.00	62.00	63.00
2003-04	51.00	61.00	62.00
2002-03	50.00	60.00	61.00
2001-02	49.30	59.00	60.00
2000-01	48.90	58.50	59.50
1999-00	45.90	54.90	55.80
1998-99	45.70	51.90	53.80
1997-98	45.70	51.90	53.80

Source: Part 2, Schedule 1, Income Tax Assessment Regulation 1997.

For the rate prescribed for earlier income years, see r 147 of the Income Tax Regulations 1936.

If you use this method:

 

> you do not need written evidence but you may need to be able to show how you worked out your business kilometres.

> your claim is based on a set rate for each business kilometre, and

> you are able to claim a maximum of 5,000 business kilometres even if you have travelled more.

> if the car is jointly owned and each person uses that car separately for income producing purposes, each person is entitled to claim up to 5,000km.
                       

> You cannot claim any expenses relating to a car owned or leased by someone else, including your employer or another member of your family. Registration does not necessarily mean ownership. If you use the car as if you owned it and pay all the running expenses you are deemed to own it for the purpose of using this method to claim a tax deduction even if it is registered in somebody else‘s name.

For each full year:

 

> If you bought the car, you can claim 12 per cent of the cost of the car. 

 

> If you leased the car, you can claim 12 per cent of its market value at the time that you first leased it.

 

> Your car must have (or would have) travelled more than 5,000 business kilometres during the financial year.

 

> The maximum allowable deduction is 12% of the luxury car limit in the year in which you first used or leased the car.

 

You do not need written evidence if you use this method, but you may need to be able to show how you worked out your business kilometres.

 

 

Claims for lease charges for luxury cars are not allowed under this method.  The vehicle is to be treated as if purchased on hire purchase at a GST inclusive price limited to the relevant luxury car limit.

 

For each full year:

 

> This method allows you to claim one-third of each car expense including operating expenses, leasing expenses or depreciation.  Car expenses do not include capital costs, such as the initial cost of your car or improvements to your car.

 

> Your car must have (or would have if you had it for the whole financial year) travelled more than 5,000 business kilometres during the financial year.

 

> You need written evidence for all car expenses except for fuel and oil costs.

 

> There are two ways to work out fuel and oil costs. Use your fuel and oil receipts if you have them or keep odometer records and make a reasonable estimate based on those records.

 

Odometer records need to show the odometer reading of the car at the start and end of the period that you owned or leased the car. They should also show the car's engine capacity, make, model and registration number.

 

You may also need to show how you worked out your business kilometres and any reasonable estimate you made.

 

 

If you use this method your claim is based on the business use percentage of each car expense.

 

You need to keep:

 

> a logbook to calculate the business use percentage

 

> odometer readings for the start and end of the period you owned or leased the car, and

 

> written evidence for all car expenses, except for fuel and oil costs.

 

Your logbook is valid for five years. The logbook must cover at least 12 continuous weeks.

 

If you started to use your car for business purposes less than 12 weeks before the end of the financial year, you are able to continue to keep a logbook into the next financial year so that your logbook covers the required 12 weeks. If you want to use the logbook method for two or more cars, the logbook for each car must cover the same period.

 

Your logbook must contain the following information:

 

> when the logbook period begins and ends

 

> the car’s odometer readings at the start and end of the logbook period

 

> the total number of kilometres that the car travelled during the logbook period

 

> the number of kilometres travelled for work activities based on journeys recorded in the logbook. If you make two or more in a row on the same day, they can be recorded as a single journey, and

 

> the business use percentage for the logbook period.