5 min read

Guide to Calculating Vehicle Deductions

Written by
Sebastian Garcia
Published on
January 11, 2024

If the use of your vehicle is related to your work activity, the expenses incurred can be deducted in your annual tax return. There are two methods for calculating the deduction of these expenses. The only restriction in choosing the method for calculating the deduction is the limitation of 5000 km per year per vehicle (see below for a more detailed explanation). The methods are as follows:

Cents per Kilometre

The deduction applicable with this method is as follows:

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

With an annual limit of 5,000 km per vehicle. In other words, the maximum deduction that can be obtained through this method is $4,250 for the 2024 Fiscal Year (5000 kilometers x 85 cents). To justify this deduction, a diary must be maintained, including the date, purpose of the trip, and kilometers traveled for work purposes.


Maria Perez works in a medical laboratory with the central office in Brisbane and the production plant in Logan. Once a month, Maria has to travel from the central office to the laboratory, covering a total distance of 50 kilometers. In this case, the deduction would be $510 (50 kilometers x 12 months x 85 cents).


The procedure for calculating the deduction for vehicle use for work through this method is as follows:

  • Maintain a logbook (a diary) recording ALL trips made with the vehicle over a period of 3 months. Information to collect for each trip includes: date, purpose of the trip, odometer reading at the beginning and end of the trip, total kilometers traveled.
  • Keep a record of ALL vehicle expenses (e.g., gasoline, maintenance, depreciation, insurance, registration). It is necessary to keep invoices for all expenses incurred for this purpose.

With the collected information, the deduction can be calculated as follows:

  • First, calculate the percentage of vehicle use for work by dividing the total kilometers traveled for work by the total kilometers traveled by the vehicle.
  • Sum all vehicle expenses during the fiscal year.
  • Multiply the total expenses by the percentage of vehicle use for work.


Maria Perez correctly maintained her logbook during the quarter from February to April. The total kilometers traveled during this quarter were 8,500 kilometers. The total kilometers for work were 3,500 kilometers. Therefore, the percentage of vehicle use for work is 41% (3,500 kilometers / 8,500 kilometers * 100).

At the same time, Maria incurred the following expenses and kept invoices for them:

  • Gasoline = $5500
  • Registration = $700
  • Insurance = $700
  • Maintenance = $1300

In this case, the total value that Maria can deduct is $3,362 (8,200 * 41%).

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