Sylvie Willis
If you use your car for work-related journeys, you can claim fuel expenses on your tax return. There are two main methods for claiming fuel expenses: the cents per km method and the logbook method. The former does not require receipts, while the latter does. For the 2023-24 financial year, the maximum claimable amount without receipts is $4250, calculated as 5,000km (the maximum claimable kilometres) x $0.85 (the flat rate for that financial year). However, the Australian Taxation Office (ATO) may still ask for an explanation of what is being claimed and how it is work-related.
| Characteristics | Values |
|---|---|
| Maximum claimable amount for fuel without receipts for the 2023-24 financial year | $4250 |
| Calculation method | 5000km (capped by the tax office) x $0.85 per km (flat rate for 2023-24) |
| Requirements | Must use your car for work, must have paid for the fuel yourself, must keep records of trips (e.g. diary, Australian Tax Office (ATO) app) |
| Other methods to claim fuel on tax return | Logbook method (requires receipts), cents per km method with a logbook |
| Maximum claimable amount without receipts for work-related expenses | $300 |
| Maximum claimable amount without receipts for clothing and laundry expenses | $150 |
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What You'll Learn
The cents per km method
If you use your car for work, you can claim fuel costs on your tax return without receipts through the 'cents per km method'. This method uses a flat rate per kilometre travelled for work, which is set by the Australian Taxation Office (ATO) and reviewed regularly. The rate for the 2023-24 financial year is $0.85 per kilometre, with a maximum of 5,000 kilometres that can be claimed, resulting in a total claimable amount of $4,250. It is important to note that this method is only available to sole traders or partnerships and not to companies or trusts.
To use the cents per km method, you must meet certain requirements. Firstly, you must be an employed individual who has not been reimbursed by your employer for your business kilometres. Secondly, you must own, lease, or hire the car under a hire-purchase arrangement. While this method does not require written evidence of the exact number of kilometres travelled, the ATO may ask you to show how you calculated your business kilometres, such as through diary records or the ATO app. It is recommended to keep your receipts and extensive records as backup.
The cents per km rate is designed to cover various vehicle running expenses, including registration, fuel, servicing, insurance, and depreciation. This means that if you use this method, you cannot make a separate claim for fuel costs. The rate for the 2022-23 income year was $0.78 per kilometre, and for the 2020-21 and 2021-22 income years, it was $0.72 per kilometre. It is important to check the applicable rate for the relevant financial year when making your claim.
Alternatively, if you prefer to keep a detailed logbook of your work trips and expenses, you can consider the 'logbook method'. This method requires more documentation but may be suitable if your work-related travel exceeds 5,000 kilometres per year.
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Work-related journeys
If you use your vehicle for work, you may be able to claim tax relief on the money you've spent on fuel and electricity for business trips in your company car. To do this, you must keep records that show the actual cost of the fuel. If your employer reimburses you for some of the money, you can claim tax relief on the difference.
When claiming tax relief for fuel expenses, you must send HM Revenue and Customs (HMRC) copies of your mileage logs. These logs must include the date, mileage, and purpose of each journey. If you are claiming for more than one job, you must provide a separate mileage log for each role.
It's important to note that if you complete a Self Assessment tax return, you must claim tax relief through your tax return instead of any other method.
To ensure your claim is accurate and compliant, it's essential to maintain detailed records of your work-related journeys, including dates, distances travelled, and the costs incurred. This will help you calculate the total amount of fuel expenses you can claim and provide substantiating evidence if required by HMRC.
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The logbook method
To use the logbook method, you must keep a detailed record of every trip made in your car for at least 12 continuous weeks, including both private and business trips. 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.
The logbook is then valid for five years, and it can be used to calculate the business-use percentage of your car for the entire year. This percentage is then applied to your total car expenses for the year to determine the deductible amount.
It is important to note that the logbook method requires careful record-keeping and adherence to the specific requirements set by the Australian Taxation Office (ATO). Additionally, you must keep receipts for all expenses incurred, including fuel and oil costs, and proof of all other car expenses.
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Work-related expenses under $300
If the total of your work-related expenses is $300 or less, you can claim the total amount as a tax deduction without receipts. However, you must be able to show what the expenses were for and explain why they were essential to your job or business. This includes small expenses of $10 each or less and not more than $200 in total.
For example, if you regularly purchase a 2-litre carton of milk for your office, you can keep a diary record of these expenditures. Over the year, they may add up to $152, which you can claim at tax time without receipts as it is under $300.
Additionally, you can claim up to $4250 worth of fuel on your annual tax return without receipts for the 2023-24 financial year. This is calculated using the 'cents per km method', which is a flat rate per kilometre travelled for work. For the 2023-24 financial year, the flat rate is $0.85, and the tax office caps the number of kilometres you can claim at 5000 km.
If you are claiming expenses for assets that cost $300 or less, you can claim a deduction for the full purchase price in the year you buy it. However, if you use the asset for both private and work-related purposes, you must apportion your deduction and only claim the work-related portion of the cost.
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Keeping records
Logbook Method:
The logbook method involves keeping a detailed record of your work trips. You must keep a logbook for at least 12 continuous weeks, and it will be valid for five years. Your logbook should include the following information:
- Odometer readings for the start and end of the logbook period
- Destination and purpose of each journey
- Total kilometres travelled during the period
- Work-related usage percentage based on the logbook
- Fuel and oil receipts, or a reasonable estimate based on odometer readings
- Receipts for other car expenses, such as registration, insurance, lease payments, repairs, etc.
Cents per Kilometre Method:
The cents per kilometre method is a simplified way to calculate fuel costs, especially if you do less work-related travel. For the 2023-24 financial year, the rate is $0.85 per kilometre, with a cap of 5,000 kilometres. You don't need receipts for this method, but you must keep a record of your work kilometres in a diary, the ATO app, or another tracking tool.
General Record-Keeping Tips:
- Keep a diary or journal of work-related trips, including dates, distances, and purposes.
- Use the ATO's myDeductions tool to track expenses and calculate business kilometres.
- Retain bank statements, card statements, and income statements as supplementary evidence.
- Be diligent about obtaining and storing receipts whenever possible.
- Ensure your records are accurate and comply with ATO rules to avoid audits and penalties.
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