Katerina Swanson
There are several methods to claim fuel expenses on your tax returns. The most common methods are the 'cents per kilometre' method and the 'logbook' method. The cents per kilometre method is calculated based on a flat rate per kilometre travelled for work. For instance, the rate for the 2023-24 financial year was $0.85 per kilometre, with a maximum of 5,000 kilometres that can be claimed. On the other hand, the logbook method requires you to keep a logbook of all your work trips for at least 12 continuous weeks and retain receipts for all fuel expenses incurred. This method is generally used to calculate the business-use portion of your automotive expenses, including fuel.
How much can I claim on fuel for tax?
| Characteristics | Values |
|---|---|
| Who can claim fuel tax credits? | Businesses that use fuel in their business activities can claim credits for the fuel tax included in the price of the fuel. |
| Conditions to claim fuel tax credits | To be able to claim, businesses must be registered for goods and services tax (GST) and for fuel tax credits. |
| Time limit to claim fuel tax credits | Businesses must claim their credits within 4 years. |
| Factors determining the amount of fuel tax credit | The amount of fuel tax credit that can be claimed depends on the type of fuel used and the business activity it is used for. |
| Calculating fuel tax credits | Businesses can use the fuel tax credit tools on the ATO website to calculate their fuel tax credits accurately. |
| Fuel tax credit rates | Fuel tax credit rates are adjusted every year in February and August in line with the consumer price index. |
| Simplified fuel tax credits | If claiming less than $10,000 in fuel tax credits annually, businesses can use a simplified method to calculate their claim. |
| Claiming fuel expenses as a business | Businesses can claim fuel expenses through their corporation tax return or, for sole traders and self-employed individuals, through their Income Tax Self Assessment return. |
| Claiming VAT on fuel | Businesses registered for VAT can claim back VAT on fuel used for business trips by calculating the amount of VAT related to their business mileage. |
| Alternative method for claiming VAT | Instead of calculating VAT on fuel for business trips, businesses can claim all VAT on fuel receipts and pay a fuel scale charge to HMRC based on their car's CO2 emissions. |
| Claiming fuel expenses as an individual | Individuals who use their vehicle for work can claim fuel expenses as tax deductions, provided they have evidence that the expense was incurred for business reasons. |
| Methods for claiming fuel expenses as an individual | Individuals can use the cents per km method or the logbook method to claim fuel expenses. |
| Cents per km method | Individuals can claim a flat rate per kilometre travelled for work, which was $0.85 for the 2023-24 financial year. The rate is capped at 5,000 km per year. |
| Logbook method | Individuals can claim actual fuel costs for work journeys, supported by receipts, or estimate fuel costs by multiplying average fuel consumption by the average fuel price. This method requires a logbook of work trips for at least 12 continuous weeks. |
| Maximum claim without receipts | For the 2023-24 financial year, individuals could claim up to $4,250 worth of fuel on their tax return without receipts. |
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What You'll Learn
Cents per kilometre method
The cents per kilometre method is a way to claim car-related business expenses. This method can be used by sole traders, partnerships, and employed individuals who have not been reimbursed for their business kilometres. It takes into account all vehicle running expenses, including registration, fuel, servicing, insurance, and depreciation.
The rate for the 2025/2026 tax year is 88 cents per kilometre, allowing a claim of up to 5,000 business kilometres per car annually. To calculate the claim amount, multiply the total business kilometres travelled by the rate. For instance, if you travelled 3,000 kilometres for business purposes, your claim would be 3,000 kilometres x $0.88 = $2,640.
While this method does not require written evidence of kilometres travelled, the Australian Taxation Office (ATO) may ask for justification of the business kilometres claimed, such as diary records. It is important to note that this method only applies to cars, defined as motor vehicles designed to carry less than one tonne and fewer than nine passengers.
The alternative to this method is the logbook method, which requires detailed records of actual car expenses, including fuel, oil, registration, insurance, repairs, and depreciation. This method allows for claiming more than 5,000 kilometres but demands more complex record-keeping.
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Logbook method
The logbook method is a way to track and claim car expenses on your tax return for work-related purposes. It is a reliable and effective method for claiming car expenses and can significantly benefit individuals who use their car extensively for work.
Using the logbook method, you can maximise your tax refund by including a percentage of all car expenses, rather than relying on the set rate for fuel only. It allows you to claim more than just the cost of fuel, as it includes all car-related expenses such as maintenance, registration, insurance, and depreciation.
To use the logbook method, you need to keep a detailed record of every trip you make in your car for a continuous 12-week period, including both private and business trips. This logbook period must be 12 consecutive weeks and the logbook must include essential details such as the date of each journey, start and finish times, odometer readings, total kilometres travelled, and the purpose of the trip.
Once you have completed your logbook, you can calculate your business-use percentage. This is the ratio or percentage split between work and personal driving. To do this, divide your business kilometres by your total kilometres, then multiply by 100. For example, if you travelled a total of 4,000 kilometres in the 12-week period, and 2,200 of these were for business purposes, your calculation would be:
> Business kilometres / Total kilometres x 100
> 2,200 / 4,000 x 100 = 55%
This means you can claim 55% of your total car expenses for the year.
It is important to note that you must keep receipts for all expenses claimed, including fuel, travel, servicing, registration, and insurance. Additionally, if you are claiming depreciation, you will need the purchase receipt, the depreciation schedule, and the method used for calculating depreciation.
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Fuel tax credits
If your business uses fuel, you may be able to claim fuel tax credits for the fuel tax included in the price of the fuel. To be eligible, you must be registered for goods and services tax (GST) and for fuel tax credits. The amount of fuel tax credit you can claim depends on the type of fuel you use and your business activity. You can claim fuel tax credits on your business activity statement (BAS). Before claiming on your BAS, you need to calculate your fuel tax credits using the fuel tax credit tools on the ATO website. Fuel tax credit rates are adjusted every year in February and August. If you claim less than $10,000 in fuel tax credits annually, there is a simplified calculation method available.
There are several methods for calculating fuel tax credits. One method is the cents per kilometre method, which is calculated based on a flat rate per kilometre travelled for work. This rate changes depending on the financial year, for example, in 2023-24, the rate was $0.85 per kilometre, while in 2023-23 it was $0.78. The tax office caps the number of kilometres you can claim at 5,000 per year. Another method is the logbook method, which requires you to keep a logbook of all your work trips for at least 12 continuous weeks. Your logbook is then valid for five years, and you must also keep receipts for all expenses incurred.
If you are claiming fuel expenses as a limited company, you can do so through your corporation tax return. As a sole trader or self-employed individual, you can claim through your Income Tax Self Assessment return. If you are VAT registered, you can claim back some VAT. You can claim 45p for each mile travelled on a business trip, and 25p for each mile after you have exceeded 10,000 miles of business-related mileage claims. You can also claim all the VAT on your fuel receipts, regardless of whether the fuel was used for business or personal reasons, but you must then pay a fuel scale charge to HMRC, calculated based on your car's CO2 emissions.
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VAT on fuel
Value Added Tax (VAT) is a tax charged on the sale of goods or services and is usually included in the price of most products and services. VAT is a tax on consumer spending, and everyone who pays for goods and services pays VAT. It is built into the cost of many commonly consumed items such as clothing and petrol, so you don’t see what percentage of VAT you are paying. However, when you are buying some items or services, such as electricity and professional services, you may see the amount of VAT and the rate at which you are being charged on your bill.
If you bring goods into Ireland from outside the European Union (EU), you may be charged VAT when the goods arrive in Ireland. In general, you have to pay VAT and import duty on any goods you are bringing into Ireland from outside the EU. This includes goods purchased online and by mail order. You will have to pay VAT at the same rate as similar goods in Ireland. Within the EU, VAT is usually paid in the member state you purchased the goods, however, there are some exceptions. From 1 July 2021, all goods arriving into Ireland from non-EU countries are subject to VAT.
Some online retailers are registered with the Import One Stop Shop (IOSS) so that VAT can be included in the price you pay for the goods. Before you make a purchase, check whether the advertised price includes tax and duty costs. Customs duty is charged on goods with a value over €150. Excise Duty is payable on alcohol and tobacco products and is separate from Customs Duty.
If your business uses fuel, you may be able to claim credits for the fuel tax (excise or customs duty) included in the price of the fuel. Businesses can claim credits for the fuel tax included in the price of fuel used in their business activities. To be able to claim, you must be registered for goods and services tax (GST) and for fuel tax credits. You must claim your credits within 4 years. The 4 years start from the day after you lodge your business activity statement (BAS) for the tax period that you got the fuel in. The amount of fuel tax credit you can claim depends on the type of fuel you use and what business activity you use it in.
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Work-related journeys
If you use your car for work, you can claim fuel costs for work-related journeys on your annual tax return. This includes travel from your normal workplace to another workplace, travel between various work sites, and travel that involves carrying bulky tools or equipment for your employer. However, it is important to note that travel to and from your regular place of work is generally not considered a work-related journey and cannot be claimed.
There are different methods to calculate and claim fuel costs for work-related journeys, depending on your location and circumstances. Here are some common methods:
Logbook Method
The logbook method involves keeping a detailed logbook of your work-related journeys for a specific period, typically 12 contiguous weeks within the past five years. In your logbook, you should record the distance travelled, the business and personal mileage split, fuel costs, and any other relevant expenses. You can then use this information to calculate the business-use portion of your fuel expenses. It is important to keep receipts for all expenses claimed under the logbook method.
Cents Per Kilometre Method
The cents per kilometre method is a simplified approach where you multiply the number of kilometres travelled for work-related journeys by a standard rate per kilometre. This rate varies by country and financial year. For example, in Australia, the rate for the 2023-24 financial year is $0.85 per kilometre, with a maximum claimable limit of 5,000 kilometres, resulting in a total claimable amount of $4,250. It is important to keep records of the trips you are claiming, such as through a diary or a designated app.
VAT Reclaim Method
If your business is VAT-registered, you may be able to reclaim VAT on fuel used for business trips. This involves calculating the amount of fuel cost and VAT related to your business trips and submitting this information in your VAT return. You must keep detailed mileage records to use this method. Alternatively, you can reclaim all the VAT on your fuel receipts, regardless of whether the fuel was used for business or personal reasons, and pay a fuel scale charge to the tax office, which is calculated based on your car's CO2 emissions.
It is important to review the specific rules and regulations in your country or region, as they may vary. Additionally, keep in mind that you must have paid for the fuel yourself, and any costs reimbursed by your employer are generally not eligible for tax claims.
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Frequently asked questions
There are a few ways to calculate this. One way is to keep a log of all business miles (excluding your usual commute) and claim a set rate for each mile. Another way is to calculate the business-use portion of your automotive expenses, including fuel, by keeping a logbook for 12 weeks of your distance travelled, your business/personal usage split, and evidence of your fuel and oil costs.
The logbook method involves keeping a logbook of all your work trips for at least 12 continuous weeks. Your logbook is then valid for five years, however, you need to keep receipts for all expenses incurred. You can then add up all your receipts for fuel, travel, servicing, registration, and insurance, and calculate any depreciation on your vehicle. Use your logbook to then determine the business percentage usage to give you the total car expenses tax deduction.
The cents per km method is calculated based on a flat rate per kilometre travelled for work. For the 2023-24 financial year, that flat rate is $0.85. This rate changes depending on the financial year you are claiming for. The tax office caps the amount of kilometres you can claim at 5,000 km.
Firstly, travel to and from your regular place of work is generally not claimable. Work-related travel typically includes travel from your normal workplace to another workplace, travel between various work sites, and travel that involves carrying bulky tools or equipment for your employer. Secondly, you must have paid for the fuel yourself - any costs reimbursed by your employer are not eligible. Thirdly, you must have records to prove you incurred the expense, such as receipts and proof of work travel.
