Are you looking for an answer on whether you can claim car insurance on tax? You will find this answer in this blog post. So, keep reading the blog to get an answer.

Is Car Insurance Tax Deductible?

Generally, car insurance premiums are not tax deductible in Australia. The ATO considers car insurance a private expense for private users. Therefore, people who use cars for personal purposes are not eligible to claim their car insurance premiums as a tax deduction. It is applicable for both comprehensive and third-party car insurance. On the other hand, there are some circumstances where car insurance expenses could be tax deductible. If you are using your vehicle for business purposes, you might be eligible to claim a deduction for a part of your car insurance premiums. Car insurance is tax deductible as part of a list of expenditures for certain individuals. Basically, self-employed people can deduct car insurance, however, there are a few individuals for whom car insurance is tax deductible.

Tax Implications of Claiming Car Insurance Expenses

If you satisfy certain conditions for claiming car insurance expenses as a tax deduction, it is crucial to know its tax implications. The expense you can claim as a deduction will be based on the percentage of business use of your car. You might need to maintain accurate records of your car usage, including logs and essential documents to substantiate your claim. It is crucial to use tax deductions where they are accessible to you as a business owner, as doing so can free up more funds in your organisation which can be used elsewhere. Due to this fact, it is essential to stay on top of the ATO’s guidelines for tax deductions to work out what you can claim.

Claiming a Tax Deduction for Motor Vehicle Expenses

As a business owner, you might be eligible to claim a tax deduction for motor vehicle expenses used in running a business. The following are expenses, you can claim:

  • fuel and oil
  • repairs and servicing
  • interest on a motor vehicle loan
  • lease payments
  • insurance cover premiums
  • registration
  • depreciation (decline in value).

Ensure to follow the right calculation method when claiming motor vehicle expenses. Using the wrong method can result in incorrect claims.

Types of Car Insurance Expenses to Claim on Tax

In Australia, the types of car insurance expenses that you can claim as tax deductions are related to business or income-generating activities. It includes expenses spent for business-related car insurance, such as commercial vehicle insurance or insurance for vehicles used in an organisation.

If you use your car for both business and personal purposes, you are allowed to only claim a deduction for part of car insurance expenses that relate to the business use of the vehicle. It means you have to apportion the expenses depending on the percentage of business-related mileage as compared to the total mileage.

It is crucial to notice that private car insurance that covers personal vehicles utilised only for personal purposes, doesn’t qualify for tax deductions. Private car insurance expenses are considered personal expenses and don’t relate directly to income-generating activities. It is important to consult with small business accountants in Melbourne to seek advice to ensure that you meet certain conditions when claiming car insurance expenses on your tax return.

Are There Any Limits on the Amount that You Can Claim for Car Insurance on Tax?

There is no exact limit on the amount that you can claim for car insurance on tax in Australia. However, you might be eligible to claim part of car insurance expenses that are related to business or income-generating activities. The maximum deductible amount will be based on the percentage of business use of the vehicle. Moreover, if you are not sure what expenses you are eligible to claim, you can seek help from a tax accountant near you by searching ‘accountant near me.’


When it’s time to calculate expenses or complete forms to claim possible tax deductions, you might need help. That’s why Reliable Melbourne Accountants are here to help you complete the formalities to help you claim potential tax deductions.

More useful links:
Bookkeeping for Small Business

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