Lately I have found myself discussing the rules around claiming motor vehicle expenses quite frequently with clients so what better topic to blog about?

The following rules apply to individual taxpayers and individual partners of partnerships who use their car for income producing purposes. These rules do not apply to Companies or Trusts.

The claim methods available to you depend on the number of business kilometres travelled for the year.

In all these examples – you (or spouse) must own a car!

If you travel 5,000 business kilometres or less, you can use the:

  • cents per kilometre method, or
  • logbook method.

If you travel more than 5,000 business kilometres, you can use one of the following:

  • cents per kilometre method (but you can only claim a maximum of 5,000 kilometres)
  • 12% of original value method
  • one-third of actual expenses method
  • logbook method.

Method 1 – cents per kilometre

If you use this method:

  • your claim is based on a set rate for each business kilometre.
  • you can claim a maximum of 5,000 business kilometres.
  • you do not need written evidence to show how many kilometres you have travelled, but you may be asked to show how you worked out your business kilometres.

Method 2 – 12% of original value

If you use this method:

  • you can claim 12% of the original value of your car (subject to the car limit*).
  • your car must have travelled more than 5,000 business kilometres during the income year.
  • you do not need written evidence to show how many kilometres you have travelled, but you may be asked to show how you worked out your business kilometres.

Method 3 – one-third of actual expenses

If you use this method:

  • you can claim one-third of your car expenses.
  • your car must have travelled more than 5,000 business kilometres during the income year.
  • you must have written evidence of your fuel and oil costs or odometer records on which your estimates are based.
  • you must have written evidence of all your other car expenses.

Method 4 – logbook

If you use this method, you:

  • can claim the business use percentage of each car expense, based on your logbook records.
  • must keep a logbook for at least 12 weeks (no more than 5 years old) so you can work out the percentage.
  • must have written evidence of your fuel and oil costs or odometer records on which your estimates are based.
  • must have written evidence for all your other expenses.