How to Claim Motor Vehicle Expenses in Australia: 2024–25 Guide by Trinity Accounting Practice
Introduction
If you use your car for business or work-related travel in Australia, you may be eligible to claim motor vehicle expenses on your tax return. For the 2024-25 financial year, the ATO allows two main methods: the Cents per Kilometre method and the Logbook method.
At Trinity Accounting Practice, we help you choose the best method that maximises your deduction and ensures compliance with current ATO rules.
Cents per Kilometre Method
This method is simple and convenient, ideal for those with lower business use of their vehicle.
Key Details
- Rate: 88 cents per kilometre for 2024-25
- Maximum: Up to 5,000 business kilometres per vehicle per year
- Logbook not required: However, you must show a reasonable basis for your calculation, such as a diary, rosters, or records of client visits
- Covers all car running costs: Fuel, registration, insurance, servicing, and depreciation are all included in the rate, so no individual receipts are required
This method is best suited for employees or sole traders who occasionally use their car for work and want a straightforward way to claim without detailed record keeping.
The maximum deduction under this method for 2024-25 is 5,000 km x 88 cents = $4,400.
Logbook Method
This method is more detailed but offers higher tax deductions if your business use is significant.
Requirements
You must:
- Keep a valid logbook for 12 continuous weeks recording the date, purpose, odometer start and end, and kilometres travelled for each trip
- Retain all car-related receipts including fuel, insurance, repairs, servicing, and registration
- Calculate your business-use percentage and apply it to total car costs for the year
What You Can Claim
- Fuel and oil
- Registration and insurance
- Lease payments or interest on car loans
- Repairs, servicing, and tyres
- Depreciation (subject to the cost limit outlined below)
This method is best suited for sole traders, business owners, and contractors with high work-related car usage. If your business-use percentage is above 50%, the logbook method will almost always produce a larger deduction than the cents per kilometre method.
Car Depreciation Limit for 2024-25
If you own the car, you may claim depreciation as part of the logbook method. However, the ATO caps this based on the car cost limit.
- Depreciation cost limit: $69,674 for cars first used from 1 July 2024
- Maximum GST credit: 1/11th of the cap = approximately $6,334
If your car costs more than the limit, you can only claim depreciation up to the capped amount, not the full purchase price.
Exempt Vehicles: No Depreciation Cap
Some vehicles are exempt from the depreciation cost limit. These include:
- Heavy vehicles like trucks, vans, or utes with a carrying capacity (payload) over one tonne
- Buses designed to carry nine or more passengers
- Vehicles designed primarily to carry loads, not passengers
Many tradies and contractors who drive dual cabs or commercial vans may fall into this category. If your vehicle qualifies as exempt, you can claim full depreciation and full GST input tax credits on the purchase price. Our team at Trinity Accounting Practice can assess your vehicle classification and advise on the correct treatment.
Which Method Should You Choose
The right choice depends on your circumstances:
FactorCents per KilometreLogbook MethodRecord keepingMinimalDetailed (logbook + receipts)Maximum claim$4,400 (5,000 km x 88c)No km limit (based on actual costs and business %)Best forLow business useHigh business use (above 25-30%)Receipts requiredNoYes (all car expenses)Logbook requiredNo (but need reasonable basis)Yes (12 continuous weeks, valid for 5 years)
If you are unsure, we can calculate both methods for you and recommend the one that produces the best outcome.
Common Mistakes to Avoid
- Claiming commuting between home and your regular workplace (this is not deductible)
- Exceeding 5,000 km under the cents per kilometre method without switching to logbook
- Using an expired logbook (logbooks are valid for five years unless your circumstances change significantly)
- Failing to keep fuel and maintenance receipts when using the logbook method
- Claiming the full cost of a vehicle that exceeds the depreciation cost limit
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Choosing the Right Method with Trinity Accounting Practice
Making the right choice can significantly reduce your taxable income. At Trinity Accounting Practice, we:
- Help you determine the best method for your business or employment
- Ensure your records are compliant
- Maximise your vehicle expense deductions
- Provide advice tailored to sole traders, contractors, company directors, and business owners
Accurate bookkeeping throughout the year makes vehicle expense claims much easier at tax time. For businesses that need broader strategic oversight, our Virtual CFO division, VCFO Australia, provides budgeting and forecasting support that factors in vehicle costs and other business expenses.
If you need finance for a vehicle purchase, our mortgage brokerage division, Nexus Wealth Partners, can assist with equipment finance and business lending.
Book a consultation with Trinity Accounting Practice to review your motor vehicle deductions today.
Trinity Accounting Practice
Accounting Firm in Beverly Hills, Sydney
Phone: 02 9543 6804
Address: 159 Stoney Creek Road, Beverly Hills NSW 2209
Website: www.trinitygroup.com.au
Weekend and after-hours appointments available
Our Virtual CFO division, VCFO Australia, provides strategic financial management, budgeting, forecasting, and compliance support for growing businesses and not-for-profits.
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Our mortgage brokerage division, Nexus Wealth Partners Pty Ltd, assists clients with home loans, refinancing, and business finance.
Disclaimer: Information provided on this website is intended as a general overview only and does not replace professional advice tailored to your personal circumstances.
