Tax time is just around the corner. If you’re one of the millions of Australians who use your car for work, you could be missing out on a tax deduction—one that could put up to $4,400 back in your pocket.
The best part? You don’t even need to keep a logbook to claim it. Yet, year after year, many Australians either don’t know they’re eligible or make simple mistakes that cost them dearly.
Let’s break down how you can make the most of this ‘easy win’ and avoid the common pitfalls that trip up so many taxpayers.
The two ways to claim car expenses
If you use your car for work, the Australian Taxation Office (ATO) gives you two main ways to claim your expenses:
1. The logbook method
This is the more detailed approach. You keep a logbook for 12 consecutive weeks, recording every trip—where you went, why, and how far.
At the end, you work out the percentage of your driving that’s work-related.
You then apply that percentage to all your car expenses for the year (fuel, servicing, insurance, rego, depreciation, and so on).
This method can lead to big deductions, especially if you rack up a lot of work kilometres or have high running costs. But it does require a bit of effort and discipline.
2. The fixed rate method
Here’s where things get interesting. Under this method, you can claim 88 cents per kilometre for every work-related trip you make, up to a maximum of 5,000 kilometres per year.
That’s a potential deduction of $4,400—without the hassle of a logbook.
This method doesn’t require a full log book, but you’ll still need to substantiate your claim if questioned by the ATO. That includes records of the trips, when they occurred, and why they were work-related.
Who can claim?
Not everyone who drives to work can claim this deduction.
The ATO is very clear: your daily commute from home to your regular workplace is considered private travel and isn’t deductible (no matter how much you might wish otherwise).
But if you drive from your office to visit clients, travel between job sites, transport essential tools or equipment, or attend meetings or training away from your usual workplace, those kilometres count.
This means tradies, sales reps, project managers, and anyone whose job keeps them on the road could be in for a tidy tax-time bonus.
Even if you’re mostly office-based but occasionally need to travel for work, you may still qualify—just make sure there’s a clear work-related reason for each trip.
Common mistakes to avoid
With around 3.5 million Australians claiming car expenses each year, the ATO keeps a close eye on these deductions.
Here are the traps that catch out many taxpayers:
- Claiming your commute: Remember, home-to-work travel is off-limits unless you’re carrying bulky tools or equipment that are essential for your work.
- Guessing your kilometres: You need a reasonable basis for your claim.
Don’t just pluck a number out of thin air—keep a diary, use your calendar, or jot down trips on your phone.
- Double-dipping: If your employer reimburses you for travel, you can’t claim those expenses as well.
- No logbook for the logbook method: If you choose this method, your logbook must be up-to-date (refreshed within the last five years) and accurate.
Which method should you use?
Choosing the right method can make a big difference to your refund.
The cents-per-kilometre method is simple and suits those with lower work-related travel or who want to avoid paperwork.
The logbook method can be more lucrative if you have high car expenses or drive a lot for work, but it does require more effort.
It’s worth running the numbers or chatting to your accountant to see which method works best for you.
Don’t just assume—doing the maths could mean thousands more in your pocket.
Play by the rules—but don’t miss out
The tax system rewards those who know how to use the rules to their advantage.
If you’re driving for work and not claiming what you’re entitled to, you’re leaving money on the table.
But if you overstep the mark, you risk an audit and a nasty bill. So, take a little time to understand your options, keep good records, and claim what you’re entitled to—no more, no less.
Have your say
As tax time approaches, understanding your entitlements and knowing the correct way to claim deductions can make a real difference.
Whether you’re already familiar with the ATO’s vehicle deduction methods or just exploring your options, staying informed is key to making confident financial decisions.
Have you used the fixed rate or logbook method for work-related travel before? What was your experience when claiming vehicle deductions? Do you think more Australians could benefit from clearer information on what they’re entitled to? Feel free to share your thoughts or experiences in the comments below.
Also read: Are you missing out on a $1,519 cash boost? ATO reveals the costly mistake!
