ATO Motor Vehicle Deductions


If you use your car for work purposes you are entitled to claim the costs of using your car to do your job. Here are the breakdown on motor vehicle deductions

Under current ATO rules there are two methods of calculating work related travel costs. (Note, this only applies to the vehicle you own, if your car is owned by your employer or is part of a salary package, then you are unable to claim under either of these methods.)

Method 1. Cents per Kilometre

If you travel under 5,000 km per year in your personal vehicle for business purposes, then this is the appropriate calculation method for you:

The 2018 rate is 66 cents per km regardless of engine capacity and the cap is 5,000km making the maximum deduction $3,300.

It is a good idea to diarise your business travel so that no trips are overlooked, this can also be used to evidence your claim should the ATO query it.

Method 2. Logbook method

If your business travel exceeds 5,000 km then the logbook method provides the best option for you. The downside is that you have to keep an ATO compliant logbook for 12 weeks.

All trips made during the 12 weeks together with the kilometres incurred need to be recorded, both business and personal together with a meaningful description of the trip. The terms “To work” or “Family trip” won’t pass the ATO test!

The logbook % (business km’s divided by total km’s travelled during the 12 week period) is then applied to total vehicle costs incurred during the tax year namely fuel, repairs, depreciation, insurance and rego.

Sounds complicated? Not really. Provided you can force yourself to complete the logbook for 12 weeks – just think of the increased deduction that you will get!

If you need further help with motor vehicle deductions, contact our office to arrange a time to see an accountant.

We even have a free guide and pro forma to help you on your way.