Mercedes Mullins
As a vehicle owner, you can claim fuel costs on your tax return, but there are a few things to keep in mind. Firstly, your vehicle must be a car, not a motorcycle or truck, and it must be owned or leased by you. Secondly, the costs must be work-related, and you must have paid for the fuel yourself without reimbursement from your employer. The Australian Taxation Office (ATO) offers three methods for claiming car expense tax deductions: the logbook method, the actual expenses method, and the cents per km method. The logbook method requires you to keep a logbook of work trips for 12 weeks and calculate the business-use percentage of your automotive expenses. The actual expenses method requires receipts for all expenses, including fuel. The cents per km method provides a standard rate per kilometre travelled for work, with a maximum limit of 5,000 km that can be claimed. It's important to keep records and receipts to support your claims and ensure you understand the specific rules and criteria for each method.
| Characteristics | Values |
|---|---|
| Who can claim fuel on their tax return? | Individuals and companies who own or lease a vehicle |
| What type of vehicle can be claimed? | Cars, not motorcycles or trucks. The car must carry a load of less than one tonne and fewer than 9 passengers |
| What type of expenses can be claimed? | Fuel, servicing, registration, insurance, depreciation, repairs, tyres, oil changes, tolls, parking fees, lease payments, electricity expenses, interest charges |
| What methods can be used to claim? | Cents per kilometre method, logbook method, actual expenses method |
| What is the cents per kilometre method? | Multiply the year's business kilometres by the ATO cents per km rate to work out your deduction. The rate for 2024/2025 is 88 cents per km. The rate for 2023/2024 was 85 cents per km. The rate for 2022/2023 was 78 cents per km. The rate for 2020/2021 and 2021/2022 was 72 cents per km. |
| What is the logbook method? | Keep a logbook of all work trips for at least 12 continuous weeks. Add up all receipts for fuel, travel, servicing, registration and insurance, and calculate any depreciation on your vehicle. Use the logbook to determine the business percentage usage to give you the total car expenses tax deduction. |
| What is the actual expenses method? | Requires receipts for all expenses, including fuel and oil. A logbook must be consistently maintained to calculate the percentage of travel that was for business vs personal use. |
| Are there any exceptions to claiming fuel on tax returns? | If you receive reimbursement for your business kilometres as an employed individual, you cannot also claim car expenses at tax time. If you lease the car through salary sacrifice or a novated lease, you cannot claim fuel costs. |
| Are there any rules for claiming fuel on tax returns? | You must have paid for the fuel yourself. Travel to and from your regular place of work is generally not claimable. Work-related travel includes travel from your normal workplace to another workplace, travel between various worksites, and travel that involves carrying bulky tools or equipment for your employer. You must have records to prove you incurred the expense. |
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What You'll Learn
Work-related fuel expenditure
Fuel costs are a significant expense for Australian car owners, and with prices continuing to rise, many are looking to claim their work-related fuel expenditure in their annual tax returns.
To claim fuel costs on tax, your vehicle must be a car, and you must own, lease, or hire-purchase it. If you lease through salary sacrifice or a novated lease, you cannot claim fuel costs. Travel to and from your regular place of work is generally not claimable, but there are exceptions. Work-related travel typically includes travel between workplaces, travel between various work sites, and travel involving carrying bulky tools or equipment for your employer.
There are three methods for claiming work-related car expense deductions: the logbook method, the actual expenses method, and the cents per kilometre method.
The logbook method requires you to keep a logbook of all your work trips for at least 12 continuous weeks, valid for five years. You must also keep receipts for all expenses incurred, including fuel, travel, servicing, registration, and insurance. You can then calculate the business-usage percentage to determine the total car expenses tax deduction.
The actual expenses method requires receipts for all expenses, including fuel and oil. A logbook must also be consistently maintained to calculate the percentage of travel for business versus personal use.
The cents per kilometre method provides a standard rate, incorporating all costs of owning and operating a car. You can claim up to 5,000 kilometres per financial year at a set rate per kilometre, which varies by the financial year. For example, in 2023-24, the rate was $0.85 per kilometre, while in 2022-23, it was $0.78. This method does not require receipts, but you must keep records of your work kilometres, either in a diary or through the Australian Tax Office (ATO) app.
Regardless of the method chosen, ensure you keep extensive records, including receipts, logbooks, and proof of work-related travel, as you may be asked to prove your business-use split.
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Claiming without receipts
If you use your car for work, you can claim fuel costs on your tax return without receipts. For the 2023-24 financial year, you can claim up to $4,250 worth of fuel without receipts, which is calculated at a rate of $0.85 per kilometre travelled for work, up to 5,000 kilometres. This is known as the 'cents per km method'.
To use this method, you must keep records of the trips you are claiming, such as a diary or by using the Australian Tax Office (ATO) app. You can also use the ATO's myDeductions tool to keep track of your expenses throughout the year. The ATO may ask you to show how you calculated your business kilometres, so it is important to keep these records.
If you are claiming more than $300 worth of expenses, the ATO will expect you to be able to show how you calculated the amount and provide written evidence, such as bank transactions or card statements. If you are unable to get a receipt, you must be able to produce a bank statement with a written record of the purchase and the transaction.
The other way to claim fuel expenses is through the '"logbook method", which does require you to keep receipts. However, if you do not have all your fuel receipts, you may be able to provide a reasonable estimate of fuel costs based on odometer readings in your logbook.
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Cents per kilometre method
The cents per kilometre method is one of the ways to claim fuel on your tax return. This method is calculated on a flat rate per kilometre travelled for work. For the 2023-24 financial year, the flat rate was $0.85 per kilometre. This rate changes depending on the financial year for which the claim is being made. For instance, in 2022-23, it was $0.78, while in 2020-21 and 2021-22, it was $0.72.
The tax office caps the amount of kilometres you can claim at 5,000 km. This means that the maximum claimable figure for the 2023-24 financial year was 5,000 km x $0.85 = $4,250.
It is important to note that you need to keep records of the trips you are claiming. This can be done by keeping a diary or using the Australian Tax Office (ATO) app. You must also be able to show that you own the car and how you work out your work-related kilometres. This can be done by keeping a logbook that shows your work-related trips for a continuous period of at least 12 weeks. Your logbook is valid for up to 5 income years.
The cents per kilometre method is intended to cover all relevant expenses related to using your car for work purposes, including registration, fuel, servicing, insurance, and depreciation. It is important to note that if you receive reimbursement for your business kilometres as an employed individual, you cannot also claim car expenses at tax time.
The ATO sets the rate each year, and it is meant to cover your car's depreciation and running expenses. To work out your tax deduction, simply multiply your work-related kilometres by the rate for that year. For example, if you travelled a total of 3,000 km for work during the 2025/2026 tax year, you can claim 3,000 km x $0.88 = $2,640 in work-related car expenses for the year.
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Logbook method
The logbook method is one of the ways to claim fuel on your tax return. This method requires you 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. The logbook is then valid for five years.
The logbook is used to calculate the business-use percentage of your car for the entire year, which determines the amount of car expenses you can claim. To calculate the business-use percentage, divide the total kilometres travelled for allowable work-related trips during the logbook period by the total kilometres travelled during the logbook period, then multiply by 100.
Using the logbook method, you can claim a percentage of all car-related expenses, including fuel, maintenance, registration, insurance, and depreciation, resulting in a more significant deduction. This method is beneficial if you use your car extensively for work as it allows you to maximise your tax refund by including a percentage of all car expenses, rather than relying on the set rate for fuel only.
To calculate your car expenses, divide the total car expenses for the year by the business-use percentage. This will give you the deductible amount of car expenses you can claim on your tax return.
It is important to note that you must keep receipts for all expenses incurred when using the logbook method, including receipts from charging stations and any specific vehicle charges at home.
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Actual costs method
The actual costs method is one of the ways to calculate and claim your vehicle expenses for tax deductions. It is mandatory for individuals who drive a motorcycle, van, or a vehicle that can carry a load of more than a tonne, and for companies that want to deduct their vehicle expenses.
This method requires you to keep all your receipts and maintain extensive record-keeping. You will need to keep a logbook of all your work trips for at least 12 consecutive weeks, which will then be valid for five years. This logbook must be consistently maintained, as you must keep records that allow you to calculate the percentage of travel that was for business versus personal use.
Unlike the cents per kilometre method, there is no limit to the kilometres you can claim expenses for if you use the actual costs method. However, you must be able to show a vehicle log book and provide written evidence (receipts and/or invoices) for all of your car expenses, except for fuel and oil, which can be estimated based on your odometer readings from the start and end of the logbook period if you don't have receipts for your actual expenses.
If you are a limited company, you can claim fuel expenses through your corporation tax return. If you are a sole trader or self-employed, you can claim through your Income Tax Self Assessment return. If you are VAT-registered, you can also claim back some VAT.
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Frequently asked questions
For the 2023-24 financial year, you can claim up to $4250 worth of fuel on your annual tax return without receipts. This is calculated as 5000km (the maximum number of kilometres you can claim) x $0.85.
There are two main ways to claim fuel on your tax return: the 'cents per km method' and the 'logbook method'.
The 'cents per km method' is calculated on a flat rate per kilometre travelled for work. You simply multiply the year's business kilometres by the ATO cents per km rate to work out your deduction.
The 'logbook method' requires you to keep a logbook of all your work trips for at least 12 continuous weeks. You can then add up all your receipts for fuel, travel, servicing, registration and insurance, and calculate any depreciation on your vehicle.
To claim fuel on your tax return, your vehicle must be a car (not a motorcycle or truck) and you must own or lease the car. You must also have paid for the fuel yourself and not been reimbursed by your employer.
