If you are working under an ABN in Australia and using a vehicle to travel to job sites, deliver goods, or carry out business activities, the cost of that vehicle use may be deductible. For working holiday makers operating as sole traders, understanding how to claim vehicle expenses correctly can reduce your tax bill meaningfully at the end of the financial year.
Can you claim vehicle expenses with an ABN?
Yes, provided the vehicle is used for genuine business purposes. Driving from your accommodation to a work site, travelling between multiple job locations in a single day, and driving to purchase equipment or supplies for your business are all potentially deductible. Driving from home to a single regular workplace and back is generally considered personal travel and is not deductible.
The cents per kilometre method
The simplest method is the cents per kilometre approach. You claim a set rate for each kilometre driven for business purposes. The current ATO rate is 88 cents per kilometre. You can claim up to 5,000 kilometres per year using this method without needing a detailed logbook.
To use this method, keep a record showing how you calculated the kilometres claimed — a note recording each work trip, the distance, and the purpose is sufficient.
The logbook method
If you drive more than 5,000 kilometres for business in a year, or if you want to claim actual vehicle expenses such as fuel, insurance, and maintenance, you need to keep a logbook.
A valid logbook must be kept for a continuous period of at least 12 weeks and must record every trip during that period. Each entry must include the date, start and end odometer readings, total kilometres, destination, and the purpose of the trip.
After the 12-week period, you calculate the proportion of business use versus total use. That percentage is applied to your total vehicle expenses for the year. For example, if 60% of your kilometres were for business and total vehicle costs were $8,000, you can claim $4,800.
What records to keep
The logbook and all vehicle expense receipts must be kept for five years from the date you lodge the tax return in which the claims appear.
A practical note for working holiday makers
Many backpackers buy a car to travel and work around Australia. If that car is also used for legitimate business travel under your ABN, some running costs may be deductible. But only the business-use proportion qualifies. The road trip from Melbourne to Cairns is personal travel. The drive to a farm for your first day of ABN work is business travel. Keep them separate in your records.
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Working under an ABN and want to maximise your deductions?
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