Can I Claim My Car as a Business Expense (ABN)?

Yes — if you use your car for business purposes under an ABN in Australia, you can claim tax deductions for the work-related portion of your vehicle expenses. But you cannot claim 100% unless the vehicle is used entirely for business.

This is one of the most misunderstood tax deductions. Most people either overclaim and create risk, or underclaim and leave money on the table. The key is getting the business-use percentage right and applying the correct method.

What Car Expenses Can You Claim?

You are claiming a portion — not the whole cost. That’s where most people get it wrong.

GoTax is an online tax return system designed for small business owners, freelancers, and ABN holders who want a fast, simple, and accurate way to complete their tax return.

The Core Rule: Business Use Only

You can only claim the part of your car expenses that relates to earning income.

That means:

• Driving to a client → deductible
• Driving between job sites → deductible
• Driving from home to your regular workplace → not deductible

That last one catches people every year.

Two Methods to Claim Car Expenses

Logbook Method

You keep a logbook for a representative period (usually 12 weeks) to determine your business-use percentage.

Then you apply that percentage to all car expenses.

This method:

• usually gives a higher claim
• requires more record keeping

Cents per Kilometre Method

You claim a set rate per kilometre travelled for work, up to a limit.

This method:

• is simpler
• requires less record keeping
• often results in a lower claim

Logbook vs Cents per Kilometre

Choosing the wrong method can cost you money.

The Biggest Mistake: Overclaiming

The most common issue isn’t missing deductions — it’s overclaiming.

Examples:

• claiming 100% of vehicle use
• including personal trips
• not keeping a logbook

This is one of the highest audit-risk areas in small business tax.

Example: Correct vs Incorrect Claim

A contractor uses their car 60% for business:

• Total car costs: $10,000
• Claimable amount: $6,000

If they claim 100%:

• Overclaim → audit risk

If they claim nothing:

• Underclaim → lost refund

Getting the percentage right is everything.

What You Need to Support Your Claim

To claim correctly, you need:

• a logbook (if using that method)
• records of expenses
• details of business trips

Without records, your claim can be reduced or denied.

Record Keeping Made Simple

Tracking vehicle use manually is where most people give up.

Using something like:
https://www.ecashbooks.com.au/

…means:

• expenses are recorded
• categories are clean
• reporting is easier

You still need a logbook if using that method — but everything else becomes manageable.

Related: Understanding All ABN Deductions

Car expenses are just one part of the bigger picture:

https://www.gotax.com.au/abn-tax/abn-tax-deductions-australia

If You’re Guessing Your Car Claim

You’re either:

• overclaiming and risking a problem
• or underclaiming and losing money

Neither is a good outcome.

How GoTax Handles Vehicle Claims

GoTax guides you through your car expenses correctly:

• helps determine the right method
• applies the correct percentage
• ensures your claim is compliant
• reviewed by registered tax agents

Start your online tax return here:
https://www.gotax.com.au/

FAQ

Can I claim my car as a business expense with an ABN?

Yes — but only the work-related portion.

Can I claim 100% of my car expenses?

Only if the car is used entirely for business, which is rare.

Do I need a logbook?

Yes — if using the logbook method.

Which method gives a higher deduction?

Usually the logbook method, but it depends on usage.

What Now?

If you’re not confident in your vehicle claim, you’re probably getting it wrong.

Fix the method.
Track your usage.
Apply the percentage correctly.

That’s where the result changes.

Signup to GoTax and not only get your Tax return done, you can also ask as many questions as you like and get informed answers. You have access to the equivalent of a Tax Einstein - that is our very own D.e.r.e.k as well as the best credentialed Tax Accountants around.

https://www.gotax.com.au/small-business-tax-return

About This Article

Author: GoTax Editorial Team
Topic: Australian Tax Returns and Vehicle Expenses
Audience: Small Business Owners, ABN Holders, Contractors
Purpose: Help users correctly claim car expenses in an online tax return Australia