Yes — you can deduct car expenses when you use your vehicle for genuine work purposes. However, the single most common mistake in Australian tax returns is claiming the home-to-work commute, which the ATO does not allow. Understanding exactly which trips qualify is the starting point before calculating how much you can claim.
The Core Rule — What Qualifies
Deductible car use:
- Travel between two separate workplaces on the same day (e.g., from one job to another)
- Travel to a different work location from your usual base (e.g., a client site in a different suburb)
- Travelling to a work-related training course or conference
- Carrying bulky equipment that cannot be left at the work site and there is no secure storage provided
- Travel to pick up supplies or materials directly for work (not incidental)
Not deductible:
- Travel from home to your normal workplace — even if it is far, even if you carry tools, even if you start early
- Travel from your workplace back to home at the end of the day
- Personal errands on the way to or from work
The Bulky Equipment Exception
If your work requires you to carry tools, equipment, or materials that are:
- Bulky (awkward or heavy to carry on public transport)
- Cannot be stored securely at the work site (no secure lockup provided by the employer)
- Genuinely required for the job
Then travel from home to the work site carrying that equipment may be deductible. The burden is on you to substantiate that storage at the site is unavailable, not merely inconvenient.
The Two Methods
Once you have identified which trips qualify, choose a method:
Cents per kilometre (simpler):
- 88c/km for FY2025–26
- Up to 5,000 km per year
- No logbook needed
- Maximum $4,400
Logbook method (potentially larger claim):
- 12-week logbook required
- Claim the business-use percentage of all actual annual vehicle costs
- No cap on deduction
- Better for high-kilometre use
See vehicle tax deductions Australia for a full comparison.
If Your Employer Pays a Car Allowance
An allowance from your employer is income — it should appear on your income statement. You declare it as income and then claim the actual work-related vehicle expenses. If your expenses equal the allowance, there is no net tax effect. If expenses exceed the allowance, you deduct the excess.
Parking and Tolls
- Work parking (at a client site or temporary work location, not your usual workplace) — deductible in addition to the car claim
- Tolls on work trips — deductible
- Parking at your regular workplace — generally private (and may be subject to fringe benefits tax if employer-provided)
Frequently Asked Questions
I drive 80km each way to work. Surely that is deductible? No. The distance is irrelevant under ATO rules. A 160km round trip to your regular workplace is a private commute in exactly the same way as a 2km commute. The deduction is about the purpose of the travel, not the distance.
I am on call and have to drive to work at odd hours. Can I claim those trips? Generally no — on-call travel from home to the regular workplace is still treated as private commuting by the ATO. If you are called to a different location from your normal workplace, or if you are required to carry work equipment from home that cannot be stored at work, there may be a deductible component.
I have two jobs and drive between them. Is all that driving deductible? Yes — travel directly between two separate employers or job sites on the same day is deductible. Travel from home to the first job and from the last job back home remains private.
My car is used almost entirely for work. Can I claim 100%? If your records (logbook) show very high work use — say 90% or more — and there is a genuine reason for such minimal private use, you can claim that percentage. The ATO is sceptical of very high percentages but will accept them with strong record-keeping and a credible explanation.
This article provides general tax information. For advice tailored to your situation, speak with a registered tax agent. Find one through the Tax Practitioners Board register.