If you have a vehicle that is only used for business purposes, you can claim the full running costs as a business expense. If you use your vehicle for both business and personal trips you will need to work out how to allocate costs correctly. Travelling from home to work is a personal trip.
There are 3 ways to do this – keeping a logbook, claiming 25% of the vehicle's running costs or adding up the actual costs. We publish the kilometre rates after each tax year ends on 31 March. We usually publish the rates for the tax year just ended by May.
If your vehicle is petrol, diesel, hybrid or electric you can use either method. You need to continue to use 1 method for as long as you own the vehicle. If your vehicle isn’t petrol, diesel, hybrid or electric then you must use the actual costs method.
Logbook
You can keep a logbook to find out how much you usually use the vehicle for business. Use our kilometre rates to calculate the deduction for costs and depreciation for the business use of your vehicle.
When self-employed people use kilometre rates, they do not need to consider GST. Kilometre rates include depreciation. If you use this method, you will not claim a separate depreciation deduction or recovery of depreciation for the vehicle.
If no logbook is kept, either of these will apply.
- The claim will be limited to 25% of the vehicle running costs as a business expense. However, you may be asked to substantiate the percentage claimed.
- Before the 2018 income year, if the kilometre rates are used, the claim will be limited to 5,000 kilometres.
Car parking costs are treated the same as other vehicle expenses – deductible to the extent that they’re incurred in producing assessable income.
Kilometre rates for business use of vehicles
You can use kilometre rates to work out allowable expenses for business of a vehicle. Use the rates for the year you’re claiming.
If you’re making a reimbursement payment to someone, the current rate applies until we provide the new rate.
Actual costs
You can keep track of the actual costs of running your vehicle and treat these as a business expense.
You need to keep accurate records including details of private and work-related expenses. These expenses could be buying petrol, getting a Warrant of Fitness, paying for maintenance, insurance, and parking. Your records need to show the reasons for all business travel, and the distances of all journeys.
You can also claim a deduction on any depreciation loss for the business use of your vehicle.