$3,900 tax deduction you didn’t know you could claim

Aussies who use their car for work can claim some of the expenses back on tax. (Source: Getty / AAP)

Aussies who use their car for work may be able to claim up to $3,900 this tax time without having to keep a logbook, but you still need to prove the travel was work-related.

If you use your car for “income-producing purposes” you can claim up to 5,000 work-related kilometres, which covers the vehicle's decline in value, registration, insurance, maintenance, repairs and fuel costs, according to the Australian Taxation Office (ATO).

So, if you wanted to claim the full 5,000 kilometres, you would be able to get a deduction of $3,900.

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If you do wish to claim expenses separately, you would need to use the logbook method, which shows your work-related trips for a continuous period of at least 12 weeks.

You would also need to include the destination and purpose of every journey, the odometer reading at the start and end of each journey, and the total kilometres travelled during the period.

Financial advisor Helen Baker said, with public transport usage still down on pre-pandemic levels, many people would likely claim some form of mileage for work-related trips.

“The ATO wants records, like a logbook, to prove your travel, but that works for your benefit too – you won’t overlook claiming mileage for that quick dash to the post office or a customer site visit. Remember to claim any relevant tolls too,” Baker said.

What’s the catch?

Even if you don’t keep a logbook and just want to claim the cents-per-kilometre method, the ATO will still require you to prove your travel is work-related.

Also, travel to and from work is not included. The travel needs to be done during the work day and for work purposes. Think things like needing to go to the post office to deliver some packages to customers, or travelling to another worksite.

If you use the cents-per-kilometre method, you don't need receipts, but you do need to be able to show that you own the car and how you work out your work-related kilometres. For example, you could record your work-related trips in a diary.

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