myTax 2020 Work-related car expenses

Complete this section if you incurred car expenses as an employee for a car you owned, leased, or hired under a hire-purchase agreement.

Things to know

To claim a deduction for a work-related expense:

• you must have spent the money yourself and weren't reimbursed
• it must be directly related to earning your income
• you must have a record to prove it (usually a receipt).

If your total claim for work-related expenses is more than $300, you must have written evidence to prove your claims.

You can claim

You can claim the cost of trips you undertake in the course of performing your work duties. This may also include trips between your home and your workplace if:

• you used your car because you had to carry bulky tools or equipment that you used for work and could not leave at your workplace (for example, an extension ladder or cello)
• your home was a base of employment (that is, you were required to start your work at home and travel to a workplace to continue your work for the same employer)
• you had shifting places of employment (that is, you regularly worked at more than one site each day before returning home).

Work-related car expenses also include the cost of trips:

• between two separate places of employment when you have a second job, providing one of those places is not your home
• from your normal workplace or your home to an alternative workplace that is not a regular workplace (for example, a client’s premises) while you are on duty
• from an alternative workplace that is not a regular workplace back to your normal workplace or directly home.

If the travel was partly private, you can claim only the work-related part.

Claim at this section any work-related car expenses incurred in earning assessable foreign employment income shown on an income statement or PAYG payment summary – foreign employment.

If you received an award transport payment, see Claiming a deduction for car expenses - award transport payments.

You may need to make a balancing adjustment if you no longer own or use your car. See What happens if you no longer hold or use a depreciating asset?

See also  

• Balancing adjustment rules for cars
• Owned or leased cars – for claiming expenses for a car owned or leased by someone else
• Deductions you can claim
• Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses
• Travel between home and work and between workplaces
• Law Administration Practice Statement PS LA 1999/2 Calculating joint car expense deductions.

You can't claim

You can't claim normal trips between your home and your workplace, even if:

• you did minor work-related tasks at home or between home and your workplace
• you travelled between your home and workplace more than once a day
• you were on call
• there was no public transport near work
• you worked outside normal business hours
• your home was a place where you ran your own business and you travelled directly to a place of employment where you worked for somebody else.

Do not show at this section

• Expenses relating to motorcycles and vehicles with a carrying capacity of one tonne or more, or nine or more passengers, such as utility trucks and panel vans, go to Work-related travel expenses.
• Expenses you incurred in earning assessable foreign employment income not shown on an income statement or PAYG payment summary – foreign employment, go to Foreign employment.
• For any balancing adjustment, show your:
  • losses at Other work-related expenses
  • profits at Other income.
   

Any balancing adjustment amounts calculated in the Depreciation and capital allowance tool will be automatically shown in myTax as outlined above.

Calculation methods

There are two methods you can use to work out your car expenses deduction:

• cents per kilometre method
• logbook method

You can use the one that gives you the largest deduction or is most convenient.

Both methods require you to know or estimate your business kilometres. Business kilometres are the kilometres you travelled in the car in the course of earning assessable income (includes work-related activities).

Cents per kilometre method

• Your claim is based on a set rate for each business kilometre.
• You can claim a maximum of 5,000 business kilometres per car per year.
• The rate is 68 cents per business kilometre.
• You do not need written evidence, but you need to be able to show how you worked out your business kilometres.

Logbook method

• Your claim is based on the business use percentage of the expenses for the car.
• Your business use percentage is worked out by:
  • dividing the kilometres you travelled in the car for work during the year by the total kilometres travelled by the car during the year
  • then multiplying by 100.
   
• There is no limit on the business kilometres per car per year that can be claimed under this method
• You need a logbook and the odometer readings.
• Expenses include running costs and decline in value but not capital costs.
  • You can claim fuel and oil costs based on either:
    • your actual receipts, or
    • an estimate of 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.
   

Capital costs include the purchase price of your car, the principal on any money borrowed to buy it and any improvement costs.

For more information about the logbook method, including what to records in your logbook and the logbook timeframe, see Logbook method.

Deductions for decline in value (depreciation)

You can claim a deduction for the decline in value of the care 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 Leased luxury cars.

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 the period in the year in which you used the car for work
• you must apportion your deduction to reflect the
  • period you owned the car
  • percentage that the asset was used for work purposes.
   
• you must have directly incurred the cost of the asset and it was not reimbursed.

For more information, see Guide to depreciating assets.

Completing this section

You may need:

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

We pre-fill your tax return with work-related car expense information you uploaded from myDeductions. Check them, and add any work-related car expenses that have not pre-filled.

To claim work-related car expenses, you must first show income from salary and wages or foreign employment income in the Income statements and payment summaries section.

To personalise your return to show work-related car expenses, at Personalise return select:

• You had deductions you want to claim
• Work-related expenses

To claim your work-related car expenses, at Prepare return select 'Add/Edit' at the Deductions banner.

At the Work-related car expenses banner:

1. For each work-related car that has not been pre-filled, select Add.
2. Enter the description of the car (for example, make or model).
3. Select the Calculation method you wish to use.
   If you qualify to use both methods, you can use whichever method gives you the largest deduction or is most convenient. You can enter each in myTax to work this out. If you do, remember to delete the one you don't want to use.
4. If you select the 'Cents per kilometre' method, enter the number of business kilometres you travelled. Go to step 6.
5. If you select the 'Logbook' method enter the information into the corresponding fields. MyTax will calculate the total expenses.    
   • If you have calculated the decline in value of your car, enter the amount without any reduction for personal use. MyTax will multiply the decline in value you enter by the percentage of business use.
   • The Depreciation and capital allowances tool can help you to work out any decline in value deduction. It can also work out any deductible balancing adjustment when you stop holding a depreciating asset. Access this tool when you add your work-related car expenses and select the 'Logbook' method.
     If you used this tool, the calculated decline in value amount will automatically exclude the personal use percentage. To display results from the tool you must select the logbook method.
     Fields from this tool can't be adjusted in myTax. To make any adjustments, or to add new assets to the tool, select the 'Use the depreciation and capital allowances tool' link.
    
6. Select Save.
7. Select Save and continue when you have completed the Deductions section.

Watch: The following video shows you how to use the Depreciation and capital allowances tool.

You can watch How to use the Depreciation and capital allowance toolExternal Link in full screen on atoTV.

See also  

• Records you need to keep
• myDeductions – record-keeping in the ATO app
• Guide to depreciating assets

Leased luxury cars

If you leased a luxury car and wish to claim a deduction at this section, this information about luxury cars will help you.

A leased luxury car is a leased car that at the time the lease began had a market value of more than the 'car limit' that applied in the relevant income year.

You can claim a deduction for the decline in value of a leased luxury car (but not for other leased cars). The car can be new or second-hand. You must use the logbook method.

When claiming a deduction for decline in value, the initial value that you use for the car is the limit that applied in the income year in which the lease began. See car cost limit for depreciation.

These myTax 2020 instructions are about work-related expenses you incurred as an employee for a car you owned, leased or hired under a hire-purchase agreement.