Guide on Vehicle Expense Tax Deductions


As a business, keeping your tax logging and books updated is essential. Suppose you use your vehicle for work purposes. In that case, the Australian Taxation Office allows you to claim a deduction for these expenses, which is a huge help for small and self-employed businesses.


To learn more about vehicle expense tax deductions and how this can affect your business, read on, as our guide covers all the essential points you need to know! 


How to Figure Out Your Eligibility 

The first step to figuring out if your vehicle qualifies for tax deductions is to check if you are eligible. Of course, you can’t claim anything for the personal use of your vehicle, and the following only applies if you use your vehicle for work-related pursuits. Work-related motor use includes;

  • A car owned, leased or hired in your name (under a hire-purchase arrangement)
  • Someone else’s car
  • Any other motor vehicle (not defined as a car)


Which Work-Related Activities Are Included in Vehicle Tax Deductions? 

If you’re unsure if the activity you have used a vehicle for is tax deductible, the following list should provide some clarity; 

  • Essential work duties, including travelling from your regular workplace to meet clients off-site. 
  • Attending work meetings.
  • Collecting or delivering items.
  • Travelling to and from different work locations. 


Grey Areas of Vehicle Tax Deductions

It’s a common misconception that you must own your car for vehicle tax deductions, but deductions cover leased, hired, and other people’s cars you’ve used for work-related activities. 

While travelling to work meetings from your site is included in tax deductions, you generally can’t claim the journey between home and work. This commuting is considered private travel, so you can’t include it in your tax deductions. However, there are some cases that you could look into regarding travelling from home, such as if you usually work remotely but are now required to travel to various sites. 


How to Calculate

If your vehicle is classified as a car, you can use the cents per kilometre or logbook calculation methods, utilising ATO’s expenses calculator to use either method efficiently. 

You must use the actual cost method for vehicles not classed as cars. You must calculate the percentage ratio of work-related travel to the total travel and multiply this by the total expenses. 


Keep Your Records Safe

The best way to ensure you accurately calculate your vehicle tax deductions is by having good record-keeping. The records you keep will depend on the calculation method you use. Let’s take a look at these options:

Logbook: Represent your past year’s travel for at least 12 weeks, detailing each journey’s purpose, odometer readings for the starts and ends of trips, and the total kilometres travelled during the period. You should also include odometer readings at the beginning and end of each income year. 

Cents per kilometre: record work-related trips and clearly show how you work out business kilometres, either in a diary or the myDeductions in the ATO app.


Need Help Calculating Your Business Expenses and Vehicle Tax Deductions? We Can Help

We understand that calculating taxes can be challenging, and you may need support with your vehicle tax deductions. Contact us today, and we will provide you with the help you need.


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