Two methods, and how far you drive for work decides which suits you. Cents per kilometre pays 91 cents a kilometre up to 5,000 kilometres a year with no logbook, capped at $4,550.
What counts as business travel?
Travel with a genuine business purpose, narrower than most people assume and wider in one respect. Driving between job sites on the same day is business. So is travel to buy equipment or supplies, to a client, for training directly related to the work, and from your accommodation to a temporary work site where the location varies.
Not business travel: the daily commute from home to one regular workplace, however early or far, and personal travel. The first and last trip of the day to and from your main work base is generally private.
For a backpacker with a car this splits cleanly. The drive from your hostel to a farm for ABN work is business. The Sydney to Cairns road trip is not.
How does the cents per kilometre method work?
You claim a set rate for each business kilometre with no receipts for running costs. The rate is 91 cents, the limit is 5,000 business kilometres a year, and the maximum deduction is $4,550.
You still need a reasonable basis for the kilometres: a simple record of date, distance and purpose for each trip. No odometer readings or formal logbook, which makes it the practical choice for occasional driving.
How does the logbook method work?
You establish a business use percentage over twelve continuous weeks, then apply it to every vehicle cost for the year. During those weeks you record every trip, business and private, with date, start and end odometer readings, and purpose.
The percentage applies to fuel, insurance, registration, servicing, repairs and depreciation. Sixty per cent business use against $8,000 of vehicle costs is a $4,800 deduction, uncapped, so a driver with high running costs clears the cents per kilometre maximum comfortably.
The logbook remains valid for five years, or until your usage pattern changes significantly. Twelve weeks of admin covers the rest of the visa, which is the argument for doing it early.
Where is the crossover?
At around 5,000 business kilometres, which full time rideshare and delivery drivers pass within months. Below that, cents per kilometre is simpler and comparable. Above it, the logbook method is worth substantially more, and the gap widens with every kilometre.
Financing or leasing pushes the calculation further toward the logbook, because interest and depreciation are captured by the percentage method and not by a per kilometre rate.
What records does either method need?
More than most people keep, which is why vehicle claims are the most commonly disallowed item in the category. Keep receipts for every vehicle expense, the logbook or trip records, odometer readings at the start and end of the financial year, and the purchase invoice if you bought the car that year.
Keep all of it for five years from the date the return is lodged. A claim that cannot be evidenced is not a deduction.
Does the method carry across cars?
The business use percentage attaches to how you use a vehicle rather than to a particular car, so it generally carries across a change of car as long as the pattern has not materially changed. The expenses are specific to whichever car you ran.
That matters here, because selling one car and buying another partway through a stay is common. Twelve weeks of records from a first car do not have to be redone in a second used the same way.
Logbook or cents per kilometre for you?
Both methods are available to any ABN holder. Which one is worth more, and whether it survives review, depends on your own driving.
- How many business kilometres you drive in a year, since 5,000 is the point the cap bites.
- Whether you kept twelve continuous weeks of logbook records, which is what unlocks the uncapped method.
- What your total running costs are, since the logbook percentage applies to all of them.
- Whether the vehicle is financed or leased, which adds interest and depreciation to the pool.
- How clearly your business and private travel are separated in the records.
- Whether the trips you counted are genuinely business rather than commuting.
The method producing the larger legitimate deduction is chosen when the working holiday tax return is prepared, and you can estimate your tax refund once you know roughly what your ABN income and costs came to.