Maximising Your Vehicle Deductions: A Complete Guide

If you use your vehicle for work-related purposes, you may be eligible to claim deductions for the associated expenses on your annual tax return. There are two approved methods for calculating vehicle deductions, each with specific requirements and limitations.

Key Limitation: The Cents per Kilometre method has a cap of 5,000 km per year per vehicle (see details below).

1. Cents per Kilometre Method

This method provides a fixed deduction rate per kilometer traveled for work-related purposes. The applicable rates are:

• 85 cents per km for 2023–24
• 78 cents per km for 2022–23
• 72 cents per km for 2020–21 and 2021–22
• 68 cents per km for 2018–19 and 2019–20
• 66 cents per km for 2017–18

Annual Deduction Limit

You can claim up to 5,000 km per year per vehicle, meaning the maximum deduction for 2023–24 is $4,250 (5,000 km × 85 cents).

Record-Keeping Requirements

To justify this deduction, you must maintain a diary documenting:

• Date of each trip
• Purpose of the trip
• Kilometers traveled for work

Example

Maria Perez works in a medical laboratory with a central office in Brisbane and a production plant in Logan. Once a month, she travels between these locations, covering 50 km per trip.

Her annual deduction calculation:

• 50 km × 12 months × 85 cents = $510

2. Logbook Method

This method allows you to claim a percentage of your actual vehicle expenses based on the proportion of work-related use.

Steps to Calculate Your Deduction

1. Maintain a Logbook for at least 12 continuous weeks, recording:
   • Date of each trip
   • Purpose of the trip
   • Odometer readings (start and end)
   • Total kilometers traveled
2. Track ALL vehicle expenses, including:
   • Fuel
   • Maintenance
   • Insurance
   • Registration
   • Depreciation
3. Calculate Your Work-Related Percentage:
   • Divide total work kilometers by total kilometers traveled during the logbook period.
4. Determine Your Deduction:
   • Multiply the total vehicle expenses by the work-use percentage.

Example

Maria Perez recorded her vehicle use from February to April, totaling 8,500 km, with 3,500 km used for work.

• Work-use percentage = (3,500 ÷ 8,500) × 100 = 41%

Maria’s total vehicle expenses for the year:

• Fuel = $5,500
• Registration = $700
• Insurance = $700
• Maintenance = $1,300
• Total expenses = $8,200

Her deductible amount:

• $8,200 × 41% = $3,362

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