There are two main ways to claim your car-related expenses: the log book and cents-per-kilometre.
Method 1: The logbook
There are several things to keep in mind when using the logbook method for recording your business-related car expenses:
- The claim you make is based on the business-use percentage of your car-related expenses. You determine your business-use percentage by keeping track of your expenses for a minimum of 12 weeks (and updated every five years) in a log book.
- In this log book, you’re required to log all business journeys made in your car during the set period. You’ll need to record the following information:
- The period that the log book begins and ends
- The vehicle’s odometer readings at the beginning and end of this period
- Total kilometres driven during the period
- The business-use percentage for the period
- Each journey recorded in your log book must have the following information:
- Start and finish times
- Starting and ending odometer readings
- Total kilometres travelled
- Business reason for the journey
- You can claim all operating expenses for your car at the business-use percentage you’ve set in your log book.
- Retain all receipts throughout the year to justify your claims, including receipts for things like servicing and repairs.
- Depreciation is calculated at 25%, of the recorded value for your vehicle.
Method 2: Cents per kilometre
The second method you can use to claim car-related expenses is the cents-per-kilometre method. This method is outlined as follows:
- Your claim is based on a fixed rate for each business kilometre you travel. You’re able to claim up to 5,000 kilometres per year under this method.
- The claim is calculated by multiplying the total business-related kilometres you travel (max of 5,000 km) by the standard fixed rate of 66 cents per kilometre. This amount represents all depreciation and other vehicle expenses.
- Although you don’t need written evidence for this method, you’ll need to demonstrate that you’ve incurred the expenses you’ve claimed. Diary records of the particular business journeys you’ve made are sufficient.
What expenses can’t I claim?
You can’t claim the drive to and from your home and your main workplace. This is considered “private” use, even if:
- You’re completing small tasks required by your employer on the way to work (eg, picking up the mail or other deliverables for your employer).
- You’re driving back to work for things such as security calls or even parent-teacher interviews if you’re employed in an educational organisation.
- You’re working overtime and there’s no public transport for you to get home.