Who This Guide Is For
This guide is for anyone who uses their personal car for work-related travel in Australia — whether you're a tradie driving between job sites, a sales rep visiting clients, a nurse doing home visits, or a rideshare driver using your vehicle for income. If you incur car expenses as part of earning your income and your employer doesn't fully reimburse you, you may be entitled to claim a deduction.
We'll walk through the two ATO (ATO guidelines)-approved methods, exactly what expenses you can claim under each, how to keep proper records, and common mistakes that trigger ATO audits.
What Car Expenses Can You Claim?
You can claim a deduction for work-related car expenses when you use your own car for work purposes. Travel between home and work (commuting) is not deductible — this is the most common point of confusion.
What Counts as Work-Related Travel
✅ Claimable:
- Driving between two separate workplaces (e.g., your main job and a second job)
- Driving from your workplace to a client's site and back
- Driving between multiple job sites during the day
- Driving from home to an alternative workplace (not your regular office) for work purposes
❌ Not Claimable:
- Driving from home to your regular workplace and back (commuting)
- Personal errands and weekend trips
- Driving to work while carrying bulky tools (unless specific conditions met — see below)
ATO guidelines: The cost of normal trips between home and work is a private expense. You can only claim when your journey is directly related to performing your employment duties.
Method 1: Cents Per Kilometre
The cents per kilometre method is the simpler option. You can claim up to 5,000 km per year using a fixed rate.
FY2025–26 Rate: 88 cents per kilometre
This rate covers all vehicle running costs — fuel, registration, insurance, maintenance, and depreciation. You don't need to track individual expenses, just work-related kilometres.
Calculation Example
Jade is a community support worker who visits clients at their homes. She tracks her work kilometres using a logbook app:
| Trip Type | Weekly Km | × 48 Weeks | Total |
|---|---|---|---|
| Office → Client A | 8 km | 48 | 384 km |
| Client A → Client B | 12 km | 48 | 576 km |
| Client B → Client C | 6 km | 48 | 288 km |
| Returning to office | 14 km | 48 | 672 km |
| Annual Total | 1,920 km |
Claim: 1,920 km × $0.88 = $1,689.60
Cents Per Km — What You Need to Know
| Requirement | Detail |
|---|---|
| Maximum claim | 5,000 km per vehicle per year |
| Record keeping | A diary or app record of work trips (date, km, purpose) for a representative 12-week period |
| What it covers | All running costs — fuel, rego, insurance, servicing, depreciation |
| Multiple vehicles | 5,000 km total across all vehicles, not per car |
Method 2: Logbook Method
The logbook method is based on your actual vehicle expenses, apportioned by your work-use percentage. There's no 5,000 km limit — ideal for high-mileage drivers.
How It Works
Calculation Example
Ravi is a real estate agent. His 12-week logbook shows:
- Total km: 6,240
- Work km: 4,368
- Business-use percentage: 4,368 ÷ 6,240 = 70%
His annual car expenses:
| Expense | Annual Total | 70% Claim |
|---|---|---|
| Fuel | $4,800 | $3,360 |
| Registration & insurance | $1,600 | $1,120 |
| Servicing & repairs | $2,100 | $1,470 |
| Depreciation (decline in value) | $3,500 | $2,450 |
| Total Claim | $8,400 |
This $8,400 claim under the logbook method compares to a maximum of $4,400 under cents per km (5,000 km × $0.88). For Ravi, the logbook method delivers almost double.
Cents Per Km vs Logbook — Which Should You Use?
| Factor | Cents Per Km | Logbook Method |
|---|---|---|
| Setup effort | Low — just track work km | High — 12-week logbook required |
| Km limit | 5,000 km/year | No limit |
| Best for | Low-to-moderate work driving | High-mileage drivers |
| Record detail | Dates, km, purpose | Dates, odometer readings, km, purpose per trip |
| Maintenance | Needs a representative 12-week record | Logbook valid 5 years, keep expense receipts |
| Deduction potential | Fixed rate — predictable | Based on actual costs — may be higher |
Special Situations: Tradies, Rideshare & Heavy Vehicles
Tradies Carrying Bulky Tools
You may be able to claim trips between home and work if:
- You're required to carry bulky tools or equipment for work
- The equipment is essential to your job
- There's no secure storage at your workplace
- The equipment is bulky (by ATO standards — a laptop doesn't count)
This is a high-scrutiny area. Keep detailed records.
Rideshare and Delivery Drivers
If you drive for Uber, Didi, DoorDash, or similar platforms, your car expenses are claimed as business deductions (not employee deductions). The same two methods apply, but you can claim 100% of expenses for kilometres driven while logged into the app and available for rides/deliveries.
Common Mistakes That Trigger ATO Scrutiny
| Mistake | Why It's Wrong | What to Do Instead |
|---|---|---|
| Claiming commuting (home ↔ workplace) | Normal home-to-work travel is private, not deductible | Only claim trips between workplaces, to client sites, or to alternative work locations |
| Claiming 5,000 km with no records | The ATO requires evidence of work km — a \"guess\" won't hold up | Keep a 12-week representative log or trip diary |
| Double-claiming — cents per km + actual expenses | You can't use both methods for the same vehicle in the same year | Choose one method per vehicle per year |
| Claiming 100% business use with no logbook | The ATO expects evidence, especially for high claims | Complete a 12-week logbook before making high-percentage claims |
Records to Keep
- Logbook: 12 consecutive weeks showing start/end odometer, km travelled, date, and purpose of each trip
- Receipts: Fuel receipts, registration, insurance, service invoices, and repair receipts
- Spreadsheet or app: Summary of annual expenses and business-use calculation
- Odometer readings: Start and end of financial year odometer photos
Complex situation with mixed car use or high mileage? a registered tax agent (see the directory)
Quick Checklist
- Determine which method to use (cents per km for ≤ 5,000 work km; logbook for higher km)
- If using cents per km: record work km over a representative 12-week period
- If using logbook: complete a 12-week continuous logbook (valid for 5 years)
- Collect and organise all expense receipts (fuel, rego, insurance, service, repairs)
- Exclude commuting trips (home ↔ regular workplace)
- If carrying bulky tools for work — confirm you meet all ATO conditions
- Compare both methods before lodging (the logbook method may yield a larger deduction)
- Still unsure? See our full decision guide
*Disclaimer: This is general information only. Consult a registered tax agent for your specific situation. a registered tax agent (see the directory)