Car & Vehicle Expenses — Australia Tax Rules

Claim motor vehicle expenses using the cents per kilometre method or logbook method.

Claimable: Partially claimable · Tax authority: ATO

ATO Rules

• Cents per km method: claim 88 cents/km for 2024/25, up to 5,000 km per year — no written evidence needed.
• Logbook method: keep a logbook for 12 continuous weeks, then claim the business-use percentage of all actual running costs.
• Running costs for logbook method include fuel, registration, insurance, repairs, servicing, and depreciation.
• Commuting from home to a regular workplace is NOT deductible — this is private travel.
• Travel from home to a different work location (client site, temporary workplace) is deductible.
• A logbook is valid for 5 years unless your work circumstances change significantly.

Limits

Cents per km: max 5,000 km per year (= A$4,400 at 88c/km). Logbook: no cap but based on actual costs and documented business percentage.

Worked Example

Liam drives 4,200 business km in 2024/25. Cents per km: 4,200 × $0.88 = $3696. Alternatively, his logbook shows 62% business use and total car costs of $9,500. Logbook claim: $9,500 × 62% = $5,890. Liam uses the logbook method for the larger deduction.

Record Keeping

• Keep a logbook for 12 consecutive weeks (logbook method) — record date, destination, km, and purpose of every journey
• Record odometer readings at the start and end of each year
• Keep fuel receipts, registration, insurance, and repair invoices (logbook method)
• For cents per km, record each business journey — date, destination, km, purpose
• Retain the completed logbook for 5 years

Frequently Asked Questions

Which method gives a bigger deduction?

The logbook method often gives a larger deduction if your business use is high and running costs are significant. The cents per km method is simpler and capped at 5,000 km per year (= A$4,400). Calculate both before lodging.

Can I claim my daily commute?

No. Travel between home and your regular workplace is private travel and not deductible. If you work from home as your principal place of business, then travel from home to client sites is deductible as the home is your base.

Can I claim for an electric vehicle?

Yes. The same cents per km (88c) and logbook methods apply to electric vehicles. The ATO has also introduced separate FBT exemptions for electric vehicles provided by employers, but as a sole trader, the standard car expense methods apply.

What happens if I use the same car for rideshare and personal travel?

Rideshare trips (Uber, DiDi, Ola) are business travel — deductible. Personal trips are not. You must keep a logbook to establish the business percentage if mixing rideshare, other business, and personal use. The ATO scrutinises rideshare driver claims carefully, so accurate records are essential.