When is motor vehicle travel considered work related?

Working out whether you motor vehicle travel is tax deductible can be a mind field. Individuals are typically able to claim a tax deduction for work related travel expenses.

As a general rule, travel from your home to your workplace is not allowed as a deduction because it is classified as a private expense. (This includes situations where minor tasks are completed between home and work such as picking up the mail.) However, there are specific situations where this rule does not apply.

Here we will explore some scenario’s where motor travel constitutes as a deduction between home and work and between different workplaces.

Trip

Deductible

Private
Between two separate places of employment (not the tax payers home) yes
Between home and work where minor tasks are completed. E.g collecting mail no
Between home and work where the tax payer is required to transport bulky items to and from their work location due to there being no secure location to store them on site yes
Between home and work if you are required to travel to an alternative location for business purposes prior to attending your normal place of employment. E.g. attending a client meeting, meeting with suppliers etc yes
Between work and home if you are on call and your work is deemed to have commenced before you leave your home E.g. A doctor giving instructions to hospital staff before travelling to hospital yes
Between home and work where there is no public transport no
Between home and work where home is an unrelated place of business no
Between home and work where home is a place of employment yes
Between work and place of education where self-education expenses are deductible yes
Between home and place of education where self-education expenses are deductible yes

 

Substantiation

The ATO now only allows two methods for calculating your motor vehicle travel deductions.

  1. Cents per kilometre Method

This method enables you to claim up to 5000 business kilometres per car at a flat rate of 66c/km for 2018 and 68c/km for 2019. You can claim a maximum of 5000 business kilometres per vehicle. You do not need written evidence to show how many kilometres you have travelled, but the ATO may ask you to show how you worked out your business kilometres (for example, by producing diary records of work-related trips).

  1. The Log Book Method

This method allows you to use a business-use percentage which is determined by keeping a compliant log book and odometer readings for a period of at least 12 continuous weeks. The business-use percentage is applied to all running costs (fuel, insurance, registration, repairs) and decline in value. It is not applied to capital costs, such as the purchase price of your car, although it includes the interest expense on any loan for the car.