Top Tips For Motor Vehicle Deductions

You may be able to claim a deduction for motor vehicle expenses, if you use your vehicle in performing your work-related duties.  The ATO have been cracking down on people using the “cents per kilometre” method without supporting evidence of kilometres travelled.

Car expenses you can claim

You can claim a deduction for work-related car expenses if you use your own car to:

  • perform your work duties, for example, if you travel from your regular place of work to meet with a client
  • attend work-related conferences or meetings away from your regular place of work
  • deliver items or collect supplies
  • travel between two separate places of employment, but not if one of the places is your home (for example, when you have a second job)
  • travel from your regular place of work to an alternative place of work (that isn’t a regular place of work) and back to your regular place of work or home
  • travel from your regular place of work or your home to an alternative place of work that is not a regular place of work – for example, a client’s premises

Your employer must be willing to provide supporting evidence of your work related travel.

The motor vehicle must be registered in your name.

Calculating the deduction – cents per kilometre method

Under the cents per kilometre method:

  • A single rate is used, the rate is: 

– 72 cents per kilometre from 1 July 2020 for the 2020–21 income year

  • You can claim a maximum of 5,000 business kilometres per car
  • To calculate your deduction you multiply the number of business kilometres the car travelled in the income year by the appropriate rate per kilometre for that income year
  • You may need to provide written evidence to show how you worked out your business kilometres (for example, by producing diary records of work-related trips or using the ATO app to track your work trips)
  • Where the vehicle is registered in joint names and both owner’s use the car for separate income-producing purposes, you can each claim up to a maximum of 5,000 business kilometres.

The rate incorporates decline in value, registration, insurance, maintenance, repairs and fuel costs. You can’t add these expenses on top of the rate when you work out your deduction.



Peta Stephen