As a small business owner, you depend on your car to travel between sites, transport equipment and supplies, and drive to client meetings. When you drive, the chance of car wear and tear increases, which means you may have to face repair bills to keep your car in an optimal condition. Many of these repairs can be claimed as tax deductions. Now, you might be wondering: Can you claim car repairs on tax deductions?
Overview of tax-deductible car repair
If you are using a car for business purposes, the ATO allows various car expenses to be claimed during tax time. This includes repairs, servicing, fuel, and more. However, to claim vehicle tax deduction, you need to have a valid record and show how you calculated your claim. Here are the primary methods for claiming car repairs on tax deductions:
Cents per kilometre method
If you are a sole trader or a partnership claiming for a car, you can use this method. Cents per km method:
- Uses a set rate for each km travelled for business
- Allows you to claim a maximum of 5,000 business km per car, per year
- Doesn’t need written proof to show how many km you travelled
- Uses a rate that considers all your vehicle running expenses and depreciation.
Many sole traders and partnerships prefer seeking help from an accounting firm Port Melbourne when working out how much to claim using this method.
Rates are reviewed daily. The rate is:
- 88 cents per kilometre for 2025–26
- 88 cents per kilometre for 2024–25
- 85 cents per kilometre for 2023–24
- 78 cents per kilometre for 2022–23
- 72 cents per kilometre for 2020–21 and 2021–22
- 68 cents per kilometre for 2018–19 and 2019–20
- 66 cents per kilometre for 2017–18.
Logbook method
Some partnerships and sole traders use the logbook method when claiming expenses for a car. If this is the first year you have used the logbook method, you need to keep the logbook for at least 12 continuous weeks during the income year. This time period will represent your travel throughout the year. If you started to use your car for business purposes less than 12 weeks before the end of the income year, you need to continue keeping a logbook in the next year to cover the required 12 continuous weeks. Each logbook is valid for five years, but you may start a new logbook at anytime.
If you establish your business-use percentage using a logbook from an earlier year, you are required to keep that logbook and maintain odometer readings in the following years.
You can reach out to the best accountant Melbourne to find out which method is ideal for you.
Can you claim car repairs on tax?
You can claim car repairs on your taxes, but you need to record the percentage of business use. This simply means you are not allowed to claim a car expense used for a private purpose. Travelling between your office and home is often considered personal use, not business use. Due to this reason, you can’t claim it as a business expense. However, if you run your business from home, then your home is considered your workplace.
What expenses can you claim?
You can claim:
- Oil and fuel
- repairs and servicing
- interest on a motor vehicle loan
- lease payments
- insurance cover premiums
- Registration
- depreciation (decline in value).
Make sure to use the right calculation method when claiming motor vehicle expenses. Using the wrong method can result in incorrect claims.
Motor Vehicle Expenses for a Home-Based Business
If you are running a home-based business, you can claim the expense of trips between your home and other places if the travel is for business use. For instance, you could claim the expense of travel to:
- A client’s premises, if you are working there or delivering some documents
- Buy equipment or supplies
- Bank to do your banking
- The post office to mail invoices or get mail from a PO box
- See your business tax agent or BAS agent.
Conclusion
When tax time is around the corner, finding and organising records, logbooks and business km records can feel daunting. If you have queries regarding claiming vehicle expenses, consult Reliable Melbourne Accountants for accounting services.