Changes to work related car expenses

Changes to work related car expenses

7 December 2015

In the 2015 – 16 Budget, the Government announced changes in relation to the way in which tax deductions for the necessary use of a motor vehicle will be calculated.  

Previously, there have been four methods for calculating work related motor vehicle expenses:

  • Cents per kilometre;
  • Logbook method;
  • The 12 per cent of original value method; and
  • One-third of actual expenses incurred.   

Commencing 1 July 2015, the changes are:

  • The 12 per cent of original value of the vehicle method will no longer be used;
  • The one third of actual expenses incurred method will no longer be used; and
  • The three existing rates for cents per kilometre, determined by engine size, will be replaced with one rate of 66 cents per kilometre.

In essence, if you use your car for work purposes, from 1 July 2015, there are two options for you to keep records and calculate your car deduction claim - cents per kilometre and the logbook method.

Cents per kilometre

To use the cents per kilometre method, your claim is based on 66 cents for each business kilometre travelled. However, you can claim a maximum of 5,000 work related kilometres per vehicle per financial year, which means that the maximum deduction that can be claimed is $3,300.

You do need to keep a record of the kilometres travelled either in diary entries or documents. Alternatively, you can complete a logbook to journal your work related kilometres.

Logbook method

Using the logbook method, your tax deduction claim is based on your car’s “business use percentage”.

To work out your business use percentage, you need to keep a logbook for your car for a “typical” 12 week period. These must be 12 consecutive weeks and your logbook must include every trip you take – not just your business related trips.

Once you’ve completed your 12 week logbook, to calculate your car’s business use percentage, divide your business use kilometres by your total kilometres then, multiply by 100. For example, if you travel 4,000 kilometres in total for the 12 week period, and 1,200 of these are for business-specific purposes your car’s business use percentage would be 30%. This means that you could claim 30% of your vehicle expenses for the financial year which include running costs such as fuel, oil, servicing, registration and insurance along with vehicle depreciation.

Now that the cents per kilometre rate has changed to 66 cents per kilometre it is a good time to re-evaluate how you claim car expenses and possibly start a logbook if you think the deduction you could claim under the logbook method would be higher than the maximum cents per kilometre of $3,300 per vehicle.


Logbooks purchased at your local newsagent or supermarket are widely used today however, there are numerous Apple and Android applications (apps) available to download on your smart phone or tablet to keep electronic records including VehicleLog which complies with the ATO.

If you have any questions in relation to these changes, contact your local Boyce accountant.

Australian Tax Office
Parliament of Australia


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