If you use your own car for business purposes, one way to claim the cost is by using kilometre rates.
This can apply whether you’re self-employed or reimbursing an employee.
There are two tiers:
- Tier One: Covers the first 14,000km – includes both fixed and running costs (like rego, insurance, fuel, etc).
- Tier Two: Applies after 14,000km – covers just running costs.
Let’s say your car does 21,000km in a year and it’s a petrol vehicle. Here’s how it works:
- The first 14,000km are claimed at $1.17 per km.
- The next 7000km are claimed at $0.37 per km.
Now, if 25% of your car use is for business, you can claim:
- 25% of 14,000km = 3500km at $1.17
- 25% of 7000km = 1750km at $0.37
This gives you a fair way to charge or be reimbursed for business-related driving without needing to track every single car expense.
