A guide for keeping track of tax expenses for business vehicles

What vehicle costs can you claim?

Under ATO (Australian Taxation Office) guidelines, you may be able to claim employment-related vehicle expenses if they are incurred while you are using your own vehicle to perform a job.

This includes:

• Fuel and oil
• Repairs and servicing
• Interest on a motor vehicle loan
• Lease payments
• Insurance cover premiums
• Registration
• Depreciation*

* Car depreciation limits apply

How do you track vehicle-related costs?

There are two main ways of claiming vehicle-related expenses in Australia: the logbook and cents-per-kilometre method. These methods apply to sole traders or employees using their own vehicles for work related purposes.

Cents-per-kilometre

With this method, a single, fixed rate is applied to your travel mileage.

• You’re able to claim up to 5,000 kilometres per year
• The claim is calculated by multiplying the total business-related kilometres you travel by the standard fixed rate of cents per kilometre. Current ATO rates can be found here.
• Written evidence for this method may be required to indicate how you’ve worked out your business kilometres. Diary records of business journeys are sufficient.

Logbook method

Under the logbook method, your claim is based on the business-use percentage of your vehicle-related expenses (the percentage split between work and personal driving).

• You determine your business-use percentage by keeping track of your expenses for a minimum of 12 weeks in a log book (it can be purchased from a stationary store or downloaded as an app).
• Within it, you log all business journeys made in your vehicle during the set time period, including; the period that the log book begins and ends, the vehicle’s odometer readings at the beginning and the end of this period, total kilometres driven, as well as start and finish times and reasons for the journey.
• It’s important to keep all your receipts gathered throughout the year to justify your claims, including receipts for servicing and repairs.

Which method should you use?

Generally speaking, you should consider the advantages and disadvantages of each method and consult your accountant to figure out what method is best suited to you. However, if you keep a logbook and all of your receipts, you can then calculate your claim under both methods and determine which method gives you the greater claim.

Helpful apps for keeping track of mileage

These days, technology has made it easier to keep track of mileage. The tedious task of writing down every single trip can now be automated with helpful apps. We’ve selected a few ATO-compliant logbook apps that feature GPS tracking and great mileage reporting.