D1 Work-related car expenses 2023

Things you need to know

Claim at this question work-related car expenses you incurred as an employee for a car you either:

• owned (even if it is not registered in your name), or
• leased (even if it is not registered in your name) or hired under a hire-purchase agreement.

Work-related car expenses and work-related travel expenses are expenses you incur in the course of performing your job as an employee. You claim deductions for them at items D1 and D2. For more information, see Car and travel expenses 2023 about:

• what expenses you claim as car expenses (D1)
• what expenses you claim as travel expenses (D2)
• some examples of trips you can and cannot claim.

Owned or leased cars

You can claim at this item your work-related expenses for using a car that you owned, leased or hired (under a hire-purchase agreement).

You cannot claim at this item any expenses relating to motorcycles and vehicles with a carrying capacity of one tonne or more, or 9 or more passengers, such as utility trucks and panel vans. See D2 Work-related travel expenses 2023.

You cannot claim at this item any expenses relating to a car owned or leased by someone else, including your employer or another member of your family. However, we consider you to be the owner or lessee of a car and eligible to claim expenses where a family or private arrangement made you the owner or lessee even though you were not the registered owner. For example, you can claim for a car that was given to you by another member of your family and which, although it was not registered in your name, you used as your own and for which you paid all expenses.

If you owned or leased a car or hired one under a hire-purchase agreement, you can use either of the methods explained in this question to claim your work-related car expenses.

You will need to know or estimate your work-related kilometres. Work-related kilometres are the kilometres you travelled in the car in the course of using it for work-related purposes.

For more information

• TR 2021/1 Income tax: when are deductions allowed for employees' transport expenses?
• TR 95/34 Income tax: employees carrying out itinerant work – deductions, allowances and reimbursements for transport expenses
• PS LA 1999/2 Calculating joint car expense deductions

Did you have any of these work-related car expenses?

No	Go to question D2 Work-related travel expenses 2023, or return to main menu Individual tax return instructions 2023.
Yes	Read on.

What you need to answer this question

You may need:

• written evidence for your car expenses (receipts or invoices)
• your car logbook and odometer records.

You can choose which method to work out your car expenses. You can use the one that gives you the largest deduction or is most convenient. The two methods are:

• cents per kilometre
• logbook.

Both methods require you to know or estimate your work-related kilometres. Work-related kilometres are the kilometres you travelled in the car in the course of earning assessable income (includes work-related activities). For some examples of trips you can and cannot claim, see Car and travel expenses 2023.

You can also use our Work-related car expenses calculator to answer this question.

Expenses relating to foreign employment income

If you received assessable income from your work as an employee outside Australia that is shown on a PAYG payment summary – foreign employment, you must claim any work-related car expenses you incurred in earning that income at this item.

If you received assessable foreign employment income that is not shown on a PAYG payment summary – foreign employment, you claim your deductions against that income at question 20 Foreign source income and foreign assets or property.

Deductions for decline in value (depreciation)

You can claim a deduction for the decline in value of the car only if:

• you use the logbook method
• you owned the car or hired it under a hire-purchase agreement.

If you leased a luxury car, see Special circumstances and glossary 2023 for more information.

Remember:

• The car starts to decline in value from the day you first use it, even if you don't begin using it for work until a later time.
• You can claim a deduction only for a year in which you used the car for work.
• If you owned your car for only part of the year, you will need to apportion your deduction accordingly.

If you are claiming a deduction for the decline in value of a car, see Guide to depreciating assets 2023.

Was your car sold, disposed of, stolen or destroyed?

You might need to make a balancing adjustment if you have been claiming deductions for your car and, during 2022–23 either:

• you sold or disposed of your car
• your car was stolen or destroyed.

You do not need to make a balancing adjustment if you used only the 'cents per kilometre' method for calculating expenses for your car. You will need to make a balancing adjustment if you used only the 'logbook' method to claim your car expenses. To work out the balancing adjustment, see Guide to depreciating assets 2023.

If you had a loss after making the adjustment, include your deduction for it at question D5. If you had a profit after making your adjustment, include it at question 24 in your tax return.

Switching between the 'logbook' and 'cents per kilometre' methods

You also make a balancing adjustment if, at a time before you disposed of the car, you switched between the 'cents per kilometre' and 'logbook' methods to claim your car expenses.

To work out the amount of the balancing adjustment, contact us or your recognised tax adviser.

Award transport payment

If you received an award transport payment, see Award transport payments.

Record keeping

Keep written evidence of your car expenses, where required. If you are using the logbook method, you must record your odometer readings for the start and end of the period being claimed. Keep this evidence for 5 years from the due date for lodging your tax return. If you lodge your tax return after the due date, the 5 years start from the date you actually lodge it. If at the end of this period you are in a dispute with us that relates to this work expense, you must keep your records until the dispute is resolved.

Completing your tax return

How you complete this question depends on whether you worked out your car expenses deduction using:

• cents per kilometre method
• logbook method

If you have more than one car and you are claiming expenses under both methods, add the amounts you work out under each method and write the total at question D1 in your tax return. Print the code letter for the method that gave you the largest amount in the Claim type box beside the amount.

Cents per kilometre method

• Your claim is based on a set rate for each work-related kilometre.
• You can claim a maximum of 5,000 work-related kilometres per car, per year.
• You do not need written evidence, but you need to be able to show how you worked out your work-related kilometres. There is more information on record keeping and written evidence in Records you need to keep.

To use this method, follow the steps 1 to 4 below.

Step 1

Multiply the total work-related kilometres travelled (maximum of 5,000 km per car) by 78, which is the cents per kilometre rate for all cars.

Step 2

Divide your answer by 100 to work out the dollar amount you can claim.

Step 3

If you are claiming for more than one car using this method, repeat the steps above and add up all the amounts.

Step 4

Write the total at question D1 – label A. Print the code letter S in the Claim type box beside the amount.

Logbook method

• Your claim is based on the work-related use percentage of the expenses for the car.
• Expenses include running costs and decline in value but not capital costs, such as the purchase price of your car, the principal on any money borrowed to buy it and any improvement costs. If you need to work out the decline in value of your car, see Deductions for decline in value (depreciation).
• To work out your work-related use percentage, you need a logbook and the odometer readings for the logbook period.
• You can claim fuel and oil costs based on either your actual receipts or you can estimate the expenses based on odometer records that show readings from the start and the end of the period you had the car during the year.
• You need written evidence for all other expenses for the car.
• Your work-related use percentage is the percentage of kilometres you travelled in the car for work during the year divided by the total kilometres travelled by the car during the year.
• If the pattern of your car use changed during the year, make a reasonable estimate of your work-related use percentage for the whole of 2022–23. Take into account your logbook, odometer and other records, any variations in the pattern of use of your car and any changes in the number of cars you used in the course of earning your income.

Logbook period

Your logbook is valid for 5 years. If this is the first year you are using this method, you must have kept a logbook during 2022–23. It must cover at least 12 continuous weeks. If you started using your car for work-related purposes less than 12 weeks before the end of the year, you can extend the 12-week period into 2023–24. If you are using the logbook method for 2 or more cars, the logbook for each car must cover the same period.

If you established your work-related use percentage using a logbook from an earlier year, you need to keep that logbook and maintain odometer records. You also need to keep a logbook if we told you in writing to keep one.

Your logbook must show:

• when the logbook period starts and ends, and the odometer readings at these times
• the total number of kilometres the car travelled during the logbook period
• the number of kilometres travelled for work during the logbook period based on the journeys recorded for the period
• the work-related use percentage for the period.

Entries in the logbook for each business trip must be made at the end of the journey (or as soon as possible afterwards) and show the:

• date the journey began and ended
• odometer readings at the start and end of the journey
• kilometres travelled on the journey
• reason for the journey (this should be sufficiently descriptive to characterise it as a business journey).

Your records must also show:

• the make, model, engine capacity and registration number of the car
• the odometer readings at the start and end of each subsequent income year your logbook is valid for.

To use this method, follow the steps 1 to 4 below.

Step 1

Work out the total kilometres travelled during the logbook period and how many of these were work-related kilometres. Divide the work-related kilometres by the total kilometres travelled. This is your work-related use percentage.

Step 2

Add up your total expenses. To work out the amount to include for decline in value, see Deductions for decline in value (depreciation).

Step 3

Multiply the amount at step 2 by your work-related use percentage from step 1 (or if the pattern of use of the car has changed then use the reasonable estimate you made).

Step 4

Write the amount at A item D1. Print the code letter B in the Claim type box beside the amount.

Where to go next

• Go to question D2 Work-related travel expenses 2023.
• Return to main menu Individual tax return instructions 2023.
• Go back to question Total income or loss 2023.

Complete question D1 if you incurred car expenses as an employee for a car you owned, leased or hired.