Work-related car expenses (2 methods): 

1. Cents / per km method: maximum 5000km.

You do not need written evidence but you may need to be able to show how you worked out your work-related kilometres. You must keep records for odemetres at the beginning and the end of financial year.

2023/24 FY:    78c per kilometer

2024/25 FY:    85c per kilometer

2. Logbook method:

You do not need written evidence but you may need to be able to show how you worked out your work-related kilometres. You must keep records for odemetres at the beginning and the end of financial year.

Use a logbook to calculate the percentage of car expenses by recording the trips for 12 continuous weeks. A logbook is required every 5 years or when your job or circumstances change.

Note:  The trips to and from your work place are normally not deductible, unless you have a home-based office and you start or end your day’s work from your home. You must also substantiate this fact.

 You may claim the kms for carrying heavy tools from your home to your workplace.

Depreciation of Work-Related Motor Vehicles

Depreciation of cars for tax purposes can be claimed when used to produce taxable income. Depreciation generally is quite a big subject – read more here: depreciation.

Depreciation:

As a work-related expense, depreciation is one of the operating expenses claimable under the “One Third of Actual Expenses” and the “Log Book” methods.

Depreciation, or the ‘decline in value’, is the calculation of the costs to be allocated to each of the years of the vehicle’s use.

• cost base – generally has its normal meaning, being the amount paid for the vehicle and stamp duty paid.
• Usual life of the vehicle: according to the Tax Office estimate, the applicable base year
• the method of depreciation: diminishing value or prime cost method (see below)
• Consider the luxury car limit

Updates to the depreciation cost limits are released by the Tax Office once a year.

The depreciable cost of motor vehicle is also subject to the Luxury Car Limits, which assumes an upper limit on the cost. If the vehicle costs more than the limit, depreciation is only calculated on the limit.  The limit is (incl GST):

2024 – 25        $69.674

2020 – 24        $68,108

Goods and services tax (GST): Generally, if you purchase a car and the price is more than the car limit, the maximum amount of GST credit you can claim is one-eleventh of the car limit amount.

Vehicle Depreciation Rate – Commissioner’s Estimate

There is no single vehicle depreciation rate, because the effective life estimate is based on the type of vehicle and the conditions under which it is used. Taxpayers can choose to use the Commissioner’s estimate or to self-assess the effective life.

For the following common types of motor vehicle the current Commissioner’s Estimates of Effective Life for vehicles acquired after 10 May 2006 are:

*Assets acquired since 10 May 2006 may use a diminishing value rate equivalent to double the prime cost rate