The end of the financial year is generally one of the most stressful times for private drivers and businesses alike, particularly when it comes to understanding which tax deductions the ATO permits.
As reported by Drive in May 2026, there are numerous things you can claim to reduce your taxable income. These include car washes, car loan interest, and accessories or modifications such as roof racks and tool carriers.
However, numerous accountants are warning taxpayers that the ATO has clamped down on vehicle-related claims this upcoming EOFY, and any suspicious claims can result in a review or audit.
According to Tax Lead at CPA Australia Jenny Wong, “the single most common error we see is people claiming their daily commute. You can’t claim your regular commute, even if you work long hours or carry some tools. Only trips between work sites or for work-related tasks count”.
“If you use your car for both private and business purposes, don’t try to claim 100 per cent of your fuel expenses as deductions. Those petrol receipts for your long weekend are going to look pretty suspect. Keep it realistic, reasonable, and supported by evidence.
“The ATO uses data-driven profiles based on things like your type of job to identify where some people may be pushing the boundaries. If your claims are disproportionate to what the ATO would expect from someone in a similar job to you, you may be asked to provide additional evidence to validate your claims.”
Meanwhile, some experts say inaccurate record-keeping is also a common trap most taxpayers fall into.
Business service partner at BDO Australia Randall Bryson told Drive, “The biggest mistake a taxpayer can make is not having the right records and substantiation. The onus of proof always sits with the taxpayer in the event of an ATO audit or review”.
“Some common mistakes and misconceptions include logbook errors, claiming the same number of kilometres each year and no reasonable evidence to support, claiming a full year of depreciation when only held for part of the year, and claiming expenses already included in the cents-per-kilometre method.
"Just because your car carries your business advertising doesn’t mean it's 100 per cent deductible – private use apportionment still applies,” he advised.
Additionally, accountants said that buying a car during tax time is another mistake some employees make when filing their tax deductions to the ATO.
The Director of Tax Communications at HR Block Mark Chapman said, “There's a common misconception that simply buying a car creates a tax deduction”.
“Employees can only claim the work-related portion of car expenses, not the private-use portion. If an employee uses their car for work – beyond ordinary commuting – they may be able to claim depreciation, fuel, servicing, insurance, and other running costs based on their work-use percentage.
Ethan traded clothing racks for gear sticks in 2023, when he joined the Drive team after freelancing for various fashion and pop culture magazines. Since then, he has delved deep into all things automotive, from emerging social media trends and road rules to industry and consumer news, hard-hitting exposés, and everything in between. Despite a young career in automotive, Ethan's contributions to the Australian automotive industry culminated in him winning the Newspress Rising Star Journalist award in 2024.
