If you use a car for work purposes, you may be able to claim deductions for the expenses related to the car.

To claim a car for work use, there are two methods: the logbook method and the cents per kilometre method.

The logbook method involves keeping a logbook to record your car’s business use and expenses for 12 consecutive weeks. This will determine the percentage of your car expenses that are deductible. The expenses that can be claimed include fuel, repairs and maintenance, insurance, registration, and depreciation. You can also claim the cost of any tools or equipment you have purchased for use in the car.

The cents per kilometre method involves claiming a set rate of 72 cents per kilometre (2022 financial year) for up to 5,000 business kilometres per year. This method does not require a logbook, but you must be able to demonstrate that the kilometres claimed were for business purposes.

It’s important to note that you cannot claim expenses related to commuting to and from work, as this is considered private use. However, if you travel directly from one work location to another, or if your home is your primary place of business, you may be able to claim car expenses.

Here’s an example: John is a sales representative who travels to meet clients and attend appointments. He keeps a logbook for 12 weeks and determines that 60% of his car use is for business purposes. He spends $10,000 on car expenses for the year, including fuel, repairs, and registration. John can claim a tax deduction of $6,000 (60% of $10,000) for his car expenses.

It’s important to keep accurate records of your car expenses and business use to ensure you can claim the correct amount and comply with the law. If you require more assistance on this matter, please contact our office at 03 9973 5905.