4 Methods of claiming work-related car expenses are as below:
Method 1 – Cents per kilometre method
If you use this method:
you do not need written evidence but you may need to be able to show how you worked out your business kilometres (for example, by producing diary records of work-related trips)
your claim is based on a set rate for each business kilometre, and
you are able to claim a maximum of 5,000 business kilometres even if you have travelled more.
Method 2 – 12% of original value method
If you bought the car, you can claim 12% of the cost of the car. If you leased the car, you can claim 12% of its market value at the time that you first leased it.
Your car must have (or would have if you had it for the whole financial year) travelled more than 5,000 business kilometres during the financial year.
The maximum allowable deduction is 12% of the luxury car limit in the year in which you first used or leased the car.
You do not need written evidence if you use this method, but you may need to be able to show how you worked out your business kilometres.
Method 3 – One-third of actual expenses method
This method allows you to claim one-third of each car expense. Car expenses do not include capital costs, such as the initial cost of your car or improvements to your car.
Your car must have (or would have if you had it for the whole financial year) travelled more than 5,000 business kilometres during the financial year.
You need written evidence for all car expenses except for fuel and oil costs.
There are two ways to work out fuel and oil costs. Use your fuel and oil receipts if you have them or keep odometer records and make a reasonable estimate based on those records.
Odometer records need to show the odometer reading of the car at the start and end of the period that you owned or leased the car. They should also show the car’s engine capacity, make, model and registration number.
You may also need to show how you worked out your business kilometres and any reasonable estimate you made.
Method 4 – Logbook method
If you use this method your claim is based on the business use percentage of each car expense.
You need to keep:
a logbook to calculate the business use percentage
odometer readings for the start and end of the period you owned or leased the car, and
written evidence for all car expenses, except for fuel and oil costs.
Your logbook is valid for five years. You must have kept a logbook during the first year this method is used. The logbook must cover at least 12 continuous weeks.
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