Forgotten Car Expense Claims Australia 2024-25: 88 Cents Per KM Guide

The 2024-25 tax return time is here, and as Australians prepare their returns for the year ending June 2025, car expense claims remain one of the most significant yet misunderstood deduction opportunities. With 88 cents per kilometre now available and stricter ATO compliance measures, understanding what you can and can’t claim could save you thousands of dollars.

As tax professionals who’ve helped Australians navigate complex car expense rules for over 50 years, we’ve seen countless clients miss valuable deductions simply because they didn’t understand the rules. The ATO’s focus on compliance has intensified in 2024-25, making accurate claims more important than ever. The key is understanding both the obvious and the surprising deductions available, plus knowing exactly how to substantiate your claims.

With recent changes to rates and ongoing ATO scrutiny of vehicle-related deductions, getting your car expense claims right has never been more crucial for maximising your 2024-25 tax return.

Summary: Key Car Expense Facts for 2024-25

Here’s what every Australian taxpayer needs to know about claiming car expenses on their current tax return:

Current rate: 88 cents per kilometre for 2024-25 (up from 85 cents in 2023-24)
Maximum claim: Up to 5,000 kilometres per car using the cents per kilometre method
Two methods available: Cents per kilometre or logbook method
Record keeping essential: Evidence required for all work-related travel claims
Compliance focus: ATO conducting increased reviews of car expense claims

Bottom line: With the increased rate, maximum claims under the cents per kilometre method can now reach $4,400 per car for 2024-25 returns.

When You Can (Surprisingly) Claim Car Expenses

Many Australians don’t realise the full extent of claimable car expenses. Here are the situations where you can legitimately claim, including some that might surprise you:

Travel Between Different Workplaces

If you work at multiple locations in a single day, travel between these workplaces is fully deductible. This includes contractors, consultants, and employees who regularly move between offices or client sites.

“Many clients are surprised to learn that travel between their office and a client meeting is fully deductible,” explains senior ITP tax advisor Sarah Parks. “It’s not just tradies who can claim work travel – office workers attending external meetings have legitimate claims too.”

Carrying Bulky Tools and Equipment

The ATO allows claims for home-to-work travel when you must transport bulky tools or equipment that cannot be left securely at your workplace. This applies to far more professions than most people realise:

Musicians: Instruments like cellos, drum kits, or sound equipment
Photographers: Camera equipment, lighting, and props
IT professionals: Servers, testing equipment, or demonstration hardware
Healthcare workers: Portable medical equipment or devices
Teachers: Art supplies, sports equipment, or educational materials

The equipment must be essential for your work, bulky due to size and weight, and have no secure storage area at your workplace.

Home-Based Business Operations

If your home is an official base of employment where you start work duties before travelling to another workplace, this travel is deductible. This includes:

Consultants collecting materials from home before visiting clients
Sales representatives picking up samples or documentation
Service providers gathering tools and heading to job sites

Shifting Places of Employment

Workers with shifting places of employment who regularly work at more than one site each day can claim travel between sites and from home to the first site.

The Hidden Car Expense Most People Forget

Vehicle Depreciation – The Overlooked Goldmine

One of the most valuable forgotten claims is vehicle depreciation, which can add thousands to your deduction. Many taxpayers focus solely on running costs but overlook the decline in value of their vehicle.

“Depreciation claims can significantly boost your deduction, especially for newer or higher-value vehicles,” notes ITP business tax specialist Michael Torres. “We’ve seen clients add $3,000-$5,000 to their claims just by properly calculating depreciation.”

Important: Depreciation can only be claimed using the logbook method – it’s not included in the cents per kilometre rate.

The ATO considers passenger vehicles to have an eight-year effective life, with most depreciation claimed in the first four years. For 2024-25, there’s a car limit of $69,674 for depreciation calculations.

Understanding the Two Claiming Methods

Cents Per Kilometre Method

Perfect for lower-mileage work travel, this method offers simplicity:

Rate: 88 cents per kilometre for 2024-25
Maximum claim: 5,000 kilometres per car per year
Covers: All vehicle running costs including registration, insurance, maintenance, repairs, and fuel
Records needed: Diary or log showing how you calculated work-related kilometres

Example: If you travel 4,500 work-related kilometres in 2024-25, your claim would be 4,500 × $0.88 = $3,960.

Logbook Method

Ideal for high-mileage users and those wanting to claim depreciation:

No kilometre limit: Claim actual work-related percentage of all expenses
Includes depreciation: Can significantly increase your total deduction
Requires detailed records: 12 weeks of continuous logbook entries plus all expense receipts
Valid for five years: Same logbook can support claims for multiple years

What You Absolutely Cannot Claim

Understanding the limitations is crucial for ATO compliance:

Normal Commuting

Normal trips between your home and regular workplace remain private expenses, even if you:

Stop to buy work supplies en route
Check emails while travelling
Listen to work-related podcasts
Pick up mail for your employer

Company Car Double-Dipping

You cannot claim expenses already covered by your employer, including salary sacrifice arrangements. This is one of the most common errors the ATO identifies during reviews.

“We regularly see clients try to claim expenses for vehicles under novated lease arrangements,” explains ITP senior advisor David Kim. “This is considered double-dipping and results in penalties plus full disallowance of claims.”

Private Use Components

All claims must be strictly work-related. If you combine business and private travel, only the business portion is deductible.

Cars vs Other Vehicles – Know the Difference

The ATO’s definition of a “car” is crucial for determining your claiming method:

Cars include:

Vehicles carrying loads under one tonne
Vehicles seating fewer than nine passengers
Most four-wheel drives and SUVs

Not cars (different rules apply):

Vehicles with carrying capacity of one tonne or more
Vehicles seating nine or more passengers
Motorcycles and scooters

For non-car vehicles, you must use actual cost methods and different depreciation rules apply.

Record Keeping Requirements for 2024-25

Proper documentation is essential, especially with increased ATO scrutiny:

For Cents Per Kilometre Claims

Diary entries showing work-related travel dates, destinations, and distances
Proof of vehicle ownership or lease arrangements
Evidence supporting business purpose of travel

For Logbook Method Claims

Continuous 12-week logbook showing work vs private use
All expense receipts (fuel, insurance, registration, repairs, servicing)
Odometer readings at start and end of income year
Depreciation calculations and supporting documentation

Professional Tax Planning Checklist

Before finalising your 2024-25 car expense claims, ensure you:

Calculate both methods to determine which provides the larger deduction
Gather all relevant receipts and expense documentation
Calculate depreciation claims if using the logbook method
Separate business and private use accurately
Check for any forgotten deductible trips from earlier in the year
Ensure compliance with current ATO requirements
Consider professional advice for complex situations

Maximise Your Car Expense Claims with Professional Help

Car expense claims represent one of the largest potential deductions for working Australians, yet they’re also among the most complex and scrutinised by the ATO. With rates increasing to 88 cents per kilometre for 2024-25 and enhanced compliance measures, professional guidance ensures you claim everything you’re entitled to while avoiding costly mistakes.

Our experienced tax professionals have helped thousands of Australians navigate car expense claims, identifying forgotten deductions worth thousands of dollars. Whether you’re a tradie carrying equipment, a consultant travelling between clients, or an employee attending external meetings, we’ll ensure your claims are optimised and compliant.

Don’t leave money on the table or risk ATO penalties through incorrect claims. Find and office to see one of our excellent tax professionals and discuss your specific situation. Our comprehensive tax return preparation services include detailed car expense reviews to maximise your refund.

FAQs: Your Car Expense Questions Answered

Can I claim car expenses if I work from home?

Only if you travel from home to other work locations beyond your regular office. Working from home doesn’t automatically create claimable travel.

What if I use my car for both Uber driving and my regular job?

You can claim expenses for both income sources, but must keep separate records for each business use and ensure no overlap in your claims.

Do electric vehicle charging costs qualify?

Yes, the ATO has introduced EV home charging rates for 2024-25. You can claim home charging costs using either actual receipts or the prescribed rate method.

How long must I keep my records?

Five years from the due date for lodging your tax return. If you lodge late, the five years start from your actual lodgement date.

Can I switch between claiming methods?

Yes, but switching may trigger balancing adjustment calculations for depreciation previously claimed. Professional advice is recommended before changing methods.

What happens if I exceed 5,000 kilometres?

Under the cents per kilometre method, you can only claim the maximum 5,000 kilometres. Excess kilometres cannot be claimed using this method.

Do I need receipts for the cents per kilometre method?

No written evidence required for kilometres travelled, but you must be able to show how you calculated your work-related distance.

What if my car is jointly owned?

Each owner can claim their separate work-related usage up to the 5,000-kilometre limit using the cents per kilometre method.

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