Claiming work-related car expenses is one of the most common deductions. Yet many people default to whichever method feels easiest, rather than the one that actually gives the strongest, most accurate result. However, understanding how each method works makes it far easier to choose correctly.
This method allows you to claim a set rate for each work-related kilometre you travel, up to a maximum number of kilometres per year. You don’t need detailed receipts for fuel, servicing, or other running costs. Consequently, this method is simpler and requires less record-keeping, making it a reasonable choice for people with lower work-related vehicle use.
This method requires you to keep a logbook for a minimum continuous period. You record the purpose and distance of each trip to establish the work-related percentage of your total vehicle use. You then apply that percentage to your actual running costs — fuel, insurance, registration, servicing, and depreciation — to calculate your deduction. Therefore, this method requires considerably more record-keeping. However, it often results in a larger claim for people who use their vehicle extensively for work.
Cents per kilometre tends to suit people with moderate work-related travel. It also suits those who don’t want to track every running cost, or whose vehicle is relatively low-cost to run.
The logbook method tends to suit people with significant work-related vehicle use, higher-value vehicles, or higher running costs. That’s because you base the deduction on actual expenses rather than a flat rate.
Consequently, if your work-related use is high and your vehicle costs are significant, the logbook method often results in a considerably larger claim. That’s only true if you keep the logbook accurately and consistently.
You need to keep a valid logbook for a continuous period. Record the odometer readings at the start and end of the period, along with the date, distance, and business purpose of each trip. Therefore, a logbook filled in retrospectively, from memory, or with vague trip descriptions doesn’t hold up. It won’t survive scrutiny if the ATO ever asks for evidence.
The ATO generally considers regular travel between home and your usual workplace private travel, not work-related. This applies even if you check emails or take work calls during the commute. Consequently, understanding this distinction is important, since including standard commuting in either method’s calculation is a common and problematic mistake.
You can choose a different method each year. Pick whichever gives the most accurate reflection of your circumstances for that particular year. Therefore, it’s worth reassessing your choice periodically, particularly if your work pattern or vehicle use has changed significantly.
Estimating rather than tracking. Both methods rely on accurate records — the ATO can disallow estimated kilometres or a reconstructed logbook if it reviews your claim.
Forgetting to renew a logbook. A logbook is generally valid for a set period, and you need to complete a new one to keep the claimed percentage current.
Mixing up commuting with work travel. This remains one of the most common and costly errors across both deduction methods.
EBATS helps you choose the right method, keep compliant records, and claim the strongest, most accurate vehicle deduction you’re entitled to.
📍 Suite 2.2/47 Queen St, Campbelltown NSW 2560, Australia 📞 0404 471 816 🌐 www.ebats.com.au 📧 [email protected]
Ethical Accounting & Taxation Services | Campbelltown NSW | Trusted Tax, Accounting & Business Support Since 2011