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For many, the end of October is one of the most terrifying, dread-inducing and just plain scary times of the year.
No, I’m not talking about Halloween. Aussies have another day of the dead – as in deadline – to deal with on October 31.
It’s tax time, and for the nearly 6.4 million people who drive to work (according to the 2021 Census), car costs could factor into a potential return.
Though you can’t claim your petrol, tolls or parking for any usual trip between your home and place of work, there are some exceptions you could be eligible for – particularly if you mostly work from home.
We break down what private car costs can and cannot be claimed as a tax deduction in 2025.
Driving to work from home
However, if you drive from one workplace to another, or from your workplace to another location for work purposes, those costs – including fuel – can be tax deductions.
If you work primarily from home and have to travel to an external location from work, you may be able to deduct those costs, according to the ATO.
You must meet specific conditions, however, including that working in two locations is "necessary due to the nature of your employment duties" and that the trip is not "part of a normal trip to work that would have occurred anyway".
There are some other circumstances where you might be able to claim travel from home to a workplace, CPA Australia Tax Lead Jenny Wong said.
“If you’re travelling between job sites or carrying bulky tools that can’t be stored at work, those trips might be deductible,” Wong said.
She said those who were eligible to claim driving costs needed to have their ducks in a row, or they could risk claims being rejected.
“Good record-keeping is key,” she said. “Make sure you choose the right method to claim – cents per kilometre is simpler, but the log-book method may give you a bigger deduction if your work travel is significant.”
If the fee for a toll road is incurred on your usual commute to work, then it's not a deduction, nor is parking near your usual workplace – the ATO classifies these costs as private expenses.
But, if your work requires you to drive as a part of your job – whether transporting goods, running errands or travelling to a meeting away from your usual workplace – you may be able to claim those costs.
Car accessories and modifications
Fitted a bull bar, ladder or a canopy to the car you use for work and want to make a claim? It all depends on whether it changes the car into a "business vehicle", Wong said.
“This is an area where many people get it wrong, but essentially, car accessories and modifications must be made for business purposes in order to qualify as a deductible business expense," she said.
The accessory needs to be permanent and essential for you to perform your job, Wong said.
“Tinted windows and paint protection films don’t qualify as car accessories," she said.
“If you use your vehicle for both business/work and private purposes, you should have records to determine the distribution of the two. That is, you can only claim for the percentage of time you use the vehicle for business or work.”
Even though there are situations where you can claim a parking fee or toll road charge – don't think that will extend to fines.
"You can't claim a deduction for any fines you get when you travel to work or during work. This includes parking and speeding fines or penalties," the ATO website states.
If you're in an accident and damage another car, you might be able to claim some of the costs, including to fix your own car and any costs you incur to fix the third-party vehicle.
What about your driver's licence? Well, unfortunately, a general licence is still classed as a "private expense" by the ATO – even if having one is a condition of your employment.
You can claim a deduction for the cost of a "special licence" – such as a heavy vehicle licence – if you need it for work duties.
Wong said the best way to ensure you are only claiming what you are allowed is to get advice from a tax professional.
“The ATO keeps a close eye on car-related claims, so it's best to be thorough and accurate," she said.
"If your car expenses seem unusually high, they might ask you to show extra proof. Keeping clear records makes it easier to explain your claims if you're ever asked.”
Jemimah is Drive's Consumer Editor. She has more than a decade of editorial experience and has previously worked in property and lifestyle journalism for Domain, The Age, The Sydney Morning Herald and REA Group, among many other publications.
