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tax deduction on work related car & travel expense

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Car Expense

An individual can claim deductions for car expense if the individual uses his/her own car for work related purpose as an employee. Scenarios include the following:

  • If Individual carries bulky tools or equipment;
  • Attending meetings;
  • Deliver or collect supplies;
  • Travel between 2 separate places of employment;
  • Performing roaming work.

It will be shown on individual’s payment summary if individual receives an allowance from employer for car expense. Such allowance is an assessable income and it must be included in the tax return. Individual can’t claim deductions if the person travels from home to work.

Travel Expense

An individual can claim deduction for following cases

  • Public transport for air travel and taxi fares;
  • Bridge and road tolls, parking fees and short-term car hire;
  • Meal, accommodation and incidental expenses during work related journey;
  • Travel in a car that is owned or leased by someone else.

There are four methods to calculate deductions. Among them Cent per Kilometer and Logbook methods will be followed from 1st July 2015.

1. Cent Per Kilometer

After changes of July 2015, separate charges based on the size of the engine are no longer available.

Individual can Claim

  • 66 cents per km for 2015–16 income year;
  • A maximum of 5,000 business km per car;
  • Need to record individual worked out business km.

2. Log Book Method

Using logbook method, an individual can claim tax deduction based on individual’s car percentage that is the percentage of Kilometer the individual travelled by car for business purpose.

Logbook maintainer need to keep the following things:

  • A logbook to calculate the business use percentage, for a 12-week period;
  • Odometer readings for the start and end of the period individual owned or leased the car.
  • Written evidence for all car expenses, except for fuel and oil costs.


Example:  If a person travels 6,000 kilometers in total for the 12-week period, and 1,500 of these were for business-specific purposes, the person would do the following calculation:

1,500 ÷ 6,000 × 100 = 25

Here, car’s business use percentage would be 25%.  This percentage can be claimed based on vehicle expense.


3. 12 % of original value method

Individual can claim deduction based on 12% of original cost when the person leases the car for first time.

4. One-third of actual expense method

Individual can claim 1/3 of car expenses if the person travels more than 5000 km for business purpose.

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