Motor Vehicle Claims: Your Guide to Tax Deductions in Australia

If you use your car for work, you might be able to claim motor vehicle expenses as a tax deduction. But the rules can be tricky: what counts as a motor vehicle, which trips qualify, and what records do you need?

This guide breaks it all down so you can claim confidently and stay compliant with ATO requirements.

What Counts as a Motor Vehicle?

According to the ATO, a car is a motor-powered road vehicle designed to:

• Carry less than one tonne of load, and
• Carry fewer than nine passengers, including the driver.

Which Trips Can You Claim?

You can claim motor vehicle expenses for work-related travel, such as:

• Driving between two separate workplaces
• Visiting client sites or alternative work locations
• Attending meetings or training sessions
• Delivering or picking up work-related items
• Moving between multiple work sites in one day

Important: Regular commuting from home to your usual workplace is generally not claimable, unless you meet specific exceptions.

The Bulky Tools Exception

You may claim home-to-work travel if you’re required to carry bulky tools or equipment—but only if all these conditions apply:

1. The items are essential for your job.
2. They’re bulky (awkward to transport because of size or weight).
3. They can only be transported conveniently in a motor vehicle.
4. There’s no secure storage at your workplace.
5. You’re not carrying them by choice.

Evidence you’ll need:

• A list of the items, including size and weight
• Proof they’re essential for your work
• Confirmation that your employer didn’t provide secure storage

How to Claim Motor Vehicle Expenses

1. Cents-Per-Kilometre Method

The cents-per-kilometre approach provides a straightforward way to calculate work-related vehicle deductions. For the 2025 income year, eligible taxpayers may claim $0.88 for every kilometre driven for work, with a cap of 5,000 kilometres. The total deduction is calculated by multiplying the number of work kilometres by the applicable rate.

Although keeping a logbook is not required for this method, you must still be able to demonstrate how you arrived at your work-related mileage, for example, through consistent travel patterns, work schedules, or brief diary notes. This option is generally suitable for individuals whose work travel is limited and easy to substantiate.

2. Logbook Method

Taxpayers who use their vehicle more extensively for work may find the logbook method better suited to their circumstances. This method involves keeping a 12-week continuous logbook, recording details such as travel dates, odometer readings at the start and end of each trip, and the purpose of each journey.

Once the 12-week period is complete, you can determine the percentage of the vehicle’s overall use that relates to work. This percentage is then applied to your eligible motor-vehicle costs, such as fuel, repairs, insurance, registration and depreciation. The logbook remains valid for up to five years, provided your usage pattern doesn’t change significantly.

Record-Keeping Requirements for Motor Vehicle Expense Claims

Accurate documentation is essential for any motor-vehicle deduction claim. The ATO’s substantiation rules require taxpayers to keep evidence of both expenses incurred and the work-related nature of travel.

Useful records include invoices for running costs, purchase receipts, and notes showing why and when specific trips were undertaken. Each entry should clearly show that the trip relates to your employment or business activities.

Digital tools can make it easier to collect and organise this information, ensuring quick access when needed. The ATO requires taxpayers to retain these records for at least five years from the time the data is used in a tax return. Storing records in a digital format is strongly recommended to maintain accessibility and durability throughout the record-keeping period.

Tools for Managing Motor Vehicle Expenses

Managing motor vehicle expenses effectively is essential for accurate tax reporting and maximising deductions. The right tools can make compliance simple and stress-free. Spreadsheets remain a popular choice as they allow you to record trip details like odometer readings, dates and purposes, and vehicle running costs.

Logbook apps are the game-changer for motor vehicle expense management. They automate trip recording using GPS, classify journeys as work-related or personal, and generate ATO-compliant reports ready for tax time. Many apps also offer cloud storage for secure record keeping and easy export options for accountants. Popular choices include GOFAR, Driversnote, and the ATO’s own myDeductions app. These tools save time and improve accuracy while staying ATO compliant.

Motor vehicle expense claims can make a significant difference to your taxable income when claimed correctly. Whether you opt for the simplicity of the cents-per-kilometre method or the detailed accuracy of a logbook, the key is following ATO requirements and keeping well-organised records. Leveraging digital tools and maintaining consistent documentation will help ensure your claims are both accurate and compliant, making tax time easier.

Need help with tax planning or preparing your business return? Speak with one of our accountants.

Written by Borim Choi
Senior Accountant
Oracle Accounting & Tax Advisers - Gold Coast

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