How to Claim Car Expenses From the ATO (Australia)

MyCarTracks_support · May 8, 2026, 7:20am

To claim car expenses from the ATO, first prove the basics: the car must qualify, the trip must be work-related or business-related, you must have paid the cost yourself, and you must not have been reimbursed. The ATO expenses for a car you own or lease guidance also says you need records that support the claim, which is why mileage tracking should start before tax time.

For employees, the ATO work-related car expense claim usually uses either the cents per kilometre method or the logbook method. For sole traders, partnerships, companies, trusts, and vehicles that are not cars, the method can change. For 2024-25 and 2025-26, the cents per kilometre rate is 88 cents/km, and the method is capped at 5,000 work-related kilometres per car.

This article is educational and is not tax, legal, payroll, employment, or financial advice. Australian car expense rules change by income year, vehicle type, business structure, employer payment, record quality, and fringe benefits tax treatment. Check the official source and a qualified professional before relying on a calculation.

Quick answer

Claim car expenses from the ATO by choosing the method that fits your situation, calculating only the work-related or business portion, entering the amount in the correct part of your tax return or business records, and keeping the supporting records for review. Use cents per kilometre for a simple car claim up to 5,000 eligible kilometres, use the logbook method when you can support a business-use percentage of actual car expenses, and use actual costs when your business structure or vehicle type requires it.

Car expenses claim checklist

Before you calculate anything, check these five points.

The vehicle is a car, unless you are using the business actual costs rules for another vehicle.
You own, lease, or hire the car under a hire-purchase arrangement if you are making an employee work-related car expense claim.
The kilometres are work-related or business-related, not ordinary private travel.
You paid the expense yourself and were not reimbursed for the same cost.
You have records that show the trips, kilometres, method, and calculation.

A car is generally a motor vehicle that carries less than one tonne and fewer than nine passengers, including the driver. Motorcycles, scooters, some utes, trucks, and minibuses do not use the normal employee car expense method. If the vehicle is not yours or is not a car, use the ATO guidance for work-related travel or business motor vehicle expenses instead.

Step 1: Choose the ATO method

The method decides both the calculation and the proof. Do not choose a method only because it sounds easier; choose the one you are allowed to use and can support with records.

Claim situation	Method to review	Practical test
Employee using their own qualifying car	Cents per kilometre or logbook method	Can you support work-related kilometres, ownership or lease facts, and unreimbursed costs?
Sole trader using a car	Cents per kilometre or logbook method	Do you want a capped rate claim or a business-use percentage of actual car costs?
Eligible partnership using a car	Cents per kilometre or logbook method	Keep the partnership and private-use records separate.
Sole trader or partnership using a vehicle that is not a car	Actual costs method	Keep receipts and records that separate business and private use.
Company or trust	Actual costs method	Use real business motor vehicle costs and records, regardless of vehicle type.

If you qualify for both cents per kilometre and logbook, you can compare them before lodging. For a broader method comparison, use Car Expense Tax Deductions in Australia.

Step 2: Gather your records

Records are not a year-end afterthought. They are the proof that turns a kilometre total into a claim.

For a cents per kilometre claim, gather:

trip dates or a diary, calendar, job schedule, or app report
the work purpose for each trip or trip pattern
the kilometres travelled for each work-related trip or reliable pattern
the car used
evidence that you own, lease, or hire the car where relevant
notes showing how you reached the annual work-related kilometre total

For a logbook claim, gather:

a logbook covering at least 12 continuous weeks that represents your driving
start and end odometer readings for the logbook period
each journey’s date, destination, purpose, odometer readings, and kilometres
total kilometres and work-related kilometres for the logbook period
the business-use or work-related-use percentage
receipts or other evidence for car expenses
fuel and oil receipts, or odometer records that support a reasonable estimate
purchase records and depreciation details if you claim decline in value

For actual costs, gather receipts, tax invoices, loan or lease documents, registration papers, fuel and servicing records, odometer readings, and calculation notes that show the business-use percentage.

Step 3: Calculate the car expenses claim

Run the calculation after you have removed ordinary commuting, private errands, reimbursed costs, and any vehicle use that belongs in another tax-return category.

Cents per kilometre calculation

Use the rate for the income year when the driving happened.

eligible work-related kilometres x ATO cents per kilometre rate = deduction

Example: 3,200 eligible kilometres in the 2025-26 income year at 88 cents/km gives a $2,816 deduction.

The ATO cents per kilometre method explains the business version of the method for sole traders and some partnerships. The rate includes running costs and depreciation, so do not add fuel, registration, insurance, repairs, servicing, maintenance, or decline in value again under the same method.

Logbook calculation

The logbook method starts with your work-related or business-use percentage.

work-related kilometres / total kilometres x 100 = work-related-use percentage

Then apply that percentage to eligible car expenses.

total eligible car expenses x work-related-use percentage = deduction

Example: if the logbook period shows 2,400 work-related kilometres out of 6,000 total kilometres, the work-related-use percentage is 40%. If eligible car expenses for the income year are $8,000, the claim is $3,200.

The ATO logbook method requires a representative logbook period of at least 12 continuous weeks. A logbook can usually support later income years for up to five years if your driving pattern remains representative, but you still need odometer readings and a new logbook if circumstances change.

Actual costs calculation

Actual costs are based on real vehicle expenses and the business portion of vehicle use. The ATO actual cost method is required for companies and trusts, and for sole traders or partnerships claiming vehicles such as motorcycles or vans.

The calculation is:

actual vehicle expenses x business-use percentage = deduction

If the vehicle is used partly for private travel, claim only the business percentage. A shoebox of receipts is not enough if it does not show how private use was excluded.

Step 4: Enter the claim in your tax return or business records

Employees claim work-related car expenses in the car expenses section of the individual tax return or myTax. The ATO myTax 2025 work-related car expenses instructions say you choose either cents per kilometre or logbook, then enter the method details and amount for each car.

If you test both methods in myTax, remove the one you are not using before lodging. You cannot claim the same car use twice.

Sole traders, partnerships, companies, and trusts should keep the calculation with the business records used to prepare the tax return. The ATO motor vehicle expense calculation methods page is the official starting point for business structure and vehicle-type routing.

Step 5: Keep records after lodging

Keep the claim file after you lodge, not just until the return is submitted. The ATO motor vehicle expense records guidance says business motor vehicle records generally need to be kept for five years.

A practical file includes:

the method used
the income year and rate, if cents per kilometre was used
the vehicle details
trip or logbook records
odometer readings where needed
receipts, invoices, registration, finance, lease, and servicing records where needed
reimbursement or allowance records
calculation notes showing how private use was removed

For logbook claims, keep the logbook and odometer records for five years after the end of the latest income year that relies on that logbook.

What car expenses can you include?

The answer depends on the method.

Cost type	Cents per kilometre	Logbook method	Actual costs
Fuel, oil, or charging	Included in the rate	Work-related percentage, with required records	Business percentage, with actual records
Registration and insurance	Included in the rate	Work-related percentage	Business percentage
Servicing, tyres, repairs, and maintenance	Included in the rate	Work-related percentage	Business percentage
Interest or lease payments	Included in the rate	Work-related percentage where eligible	Business percentage where eligible
Depreciation or decline in value	Included in the rate	Work-related percentage where eligible	Business percentage where eligible

Do not claim capital costs such as the purchase price of the car, loan principal, or improvements as ordinary running expenses. Depreciation is handled under the rules for decline in value when the method allows it.

Tolls and parking for work-related trips may be deductible, but keep them separate from private trips and ordinary commuting. If the cost relates to a vehicle that is not yours or not a car, it may belong under work-related travel expenses rather than work-related car expenses.

Work-related trips to include or exclude

Eligible trips usually involve driving as part of earning income, not simply getting to work.

Common claimable examples include:

travelling between separate workplaces
driving from your usual workplace to a client site, meeting, conference, or temporary worksite
collecting work supplies or delivering items
travelling directly between two jobs on the same day
itinerant work where your duties regularly move between locations
limited home-to-work trips where a specific ATO exception applies

Normal travel between home and your regular workplace is generally private. The ATO trips you can and can’t claim guidance explains common exceptions, including some home-base, alternative-workplace, and bulky-tool situations. Treat exceptions carefully; needing the car for convenience is not enough by itself.

Reimbursements and allowances

If your employer reimbursed the actual car expense and the reimbursement is not assessable income to you, do not claim the same expense again. The ATO allowances and reimbursements guidance separates reimbursements from allowances: a reimbursement pays back an actual expense already incurred, while an allowance is a separately identified payment.

A car allowance may still appear as assessable income and may not block a deduction by itself, but the deduction still needs eligible trips, unreimbursed costs, and records. Check the income statement, payslip, employer policy, and ATO treatment before deciding how to report it.

How MyCarTracks supports mileage tracking

Mileage tracking works best when it happens before the claim is calculated.

Capture trips throughout the income year.
Classify each trip as work-related, business, commuting, or private.
Review the trip purpose while the route is still easy to explain.
Export vehicle-level reports before comparing cents per kilometre and logbook.
Store the export with receipts, odometer readings, reimbursement records, and calculation notes.

MyCarTracks automatic mileage tracking can capture trips, help separate business and private kilometres, and export reports by driver, vehicle, date range, and purpose. For teams, MyCarTracks fleet tracking can help managers review driver records before reimbursement, finance, or year-end tax work.

Common mistakes

Claiming ordinary commuting as work-related travel.
Using the 88 cent rate for an older income year without checking the rate that applied then.
Claiming more than 5,000 kilometres per car under the cents per kilometre method.
Adding fuel, insurance, registration, repairs, or depreciation on top of the cents per kilometre rate.
Using the car methods for a motorcycle, truck, or other vehicle that is not a car.
Treating a car allowance and reimbursement as the same thing.
Claiming costs your employer already reimbursed.
Keeping receipts but no trip, odometer, or business-use records.
Reusing a logbook after your work pattern changed.
Mixing employee, sole trader, and private driving in one unexplained total.

FAQ

Can I claim car expenses from the ATO?

You can include car expenses in an Australian tax claim only when the vehicle, trips, payment status, and records all support the deduction. Employees usually use cents per kilometre or logbook. Some businesses must use actual costs.

How much can I claim for car expenses?

Under cents per kilometre, the maximum is 5,000 eligible kilometres per car multiplied by the income-year rate. Under the logbook method, the claim is the work-related percentage of eligible car expenses. Under actual costs, the claim is the business percentage of real vehicle expenses.

Can I claim 5,000 kilometres without receipts?

The cents per kilometre method does not require receipts for car running costs, but it does require records showing how you worked out the work-related kilometres. Do not treat the 5,000 kilometre cap as an automatic amount.

Do I need a logbook to claim car expenses?

You need a 12-week representative logbook if you use the logbook method. You do not need that full logbook for cents per kilometre, but you still need records that support the kilometre total.

Can I claim car expenses if my employer reimbursed me?

Generally, no for the same expense. If your employer reimbursed the actual cost and the reimbursement is not assessable income to you, claiming it again would double count the cost. If you received an allowance instead, check the payment treatment and your records.

Can self-employed people claim car expenses?

Yes, if the trips are for the business and the records support the claim. Sole traders and some partnerships can generally use cents per kilometre or logbook for cars. Companies, trusts, and non-car vehicles use actual costs.

Where to go next

Car Expense Tax Deductions in Australia for a deeper method comparison
ATO Mileage Guide for Australia for rates, deductions, reimbursement, and FBT context
Current ATO Cents Per Kilometre Rate (Australia) for the current rate and cap
Historical ATO Cents Per Kilometre Rates (Australia) when the driving happened in an older income year