What vehicle expenses can you claim at tax time?

Do you visit different sites as part of your job? And is your employer paying you to travel between work sites?

If not, you can lodge a claim with the ATO (Australian Taxation Office) to offset the tax you pay over the course of a financial year.

You don’t have to be a hard-working tradie; you could be a part-time kindergarten assistant working in two nearby pre-school centres on the same day.

Whatever the case, if you’re using your own car or commercial vehicle to reach a work site, you’re entitled to be reimbursed for the fuel you use driving between points A and B, provided both points are work addresses.

And you can claim the fuel used even if you’re driving a car belonging to someone else, according to the ATO, as long as you’re actually out of pocket replacing the fuel purchased by the vehicle owner.

The ATO spells out the circumstances in which you can legitimately claim expenses for using your own car to drive between work sites on this web page, and there’s a very handy fact sheet you can download here.

In brief, provided you are driving between multiple (that is, more than one) work-related destinations during the day, you can legitimately claim expenses on your tax return at the end of the financial year.

The ATO won’t recognise claims for driving between home and work (or return), unless there are extenuating circumstances, which are outlined in the fact sheet, but are also summarised below.

When you can claim expenses driving from home

There are two ways of calculating what you’re owed: the ‘Cents per kilometre’ method and the ‘Logbook’ method.

The ATO’s fact sheet goes into some detail on this subject. But in summary, you can claim up to 5000km of travel per year using the cents per kilometre method, and you will be reimbursed 72 cents for each kilometre travelled during the past financial year.

This amount covers not only fuel, but other running costs – maintenance and repairs – as well as registration, insurance and vehicle depreciation.

The ATO accepts this method of calculating your claim if you have kept a diary note for each trip or entered the details for each trip in an online tool maintained by the ATO.

In addition, the taxpayer is required to supply proof of vehicle ownership – which more often than not would be registration documents.

For the logbook method, the taxpayer can claim running costs and depreciation. As the name of the method indicates, the driver making the claim must keep accurate records in a logbook, detailing the odometer readings at the start and end of each journey, including private trips.

The ATO will pay fuel and oil costs incurred during the period – from receipts – or the figure can be calculated based on the odometer readings at the commencement and conclusion of each work-related journey.

This is an easier method to use if your travel rarely varies and you’re visiting the same work sites each week over an extended period.

The same logbook records can be applied over a five-year period, but if your work circumstances change – new employer or different job role – you will either need to fill out new logbook records or forego the tax claim.

As with the cents per kilometre method, you can maintain hard-copy records, or enter the information using an online tool provided by the ATO.

More information concerning the ‘myDeductions’ app (and a link) can be found here.

Finally, while no-one looks forward to this prospect, the ATO will allow you deductions for costs incurred if you are involved in a crash during travel to a work site matching the ATO’s definition of work travel.

This article contains general information only. Seek independent financial advice that considers your own circumstances.