Finance the Ride / Business finance
Can You Claim a Car Loan on Your Tax Return in Australia?
Employees and business owners are treated very differently. When car loan costs can be claimed on your tax return, and when they can't.
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Short answer: it depends on who you are and how the car is used. Loan repayments are never deductible in themselves. But if the car is used to earn income, some of its costs, which can include interest, may be.
If you're an employee
- Commuting between home and your regular workplace is generally private, so it isn't claimable.
- Work travel, such as between work sites, visiting clients or carrying bulky tools, may be claimable.
- You can use the cents per kilometre method (88 cents per km for 2025–26, up to 5,000 km). This rate covers all costs including interest, so you don't claim interest separately.
- Or the logbook method, where you claim the work-use percentage of actual costs, including interest and depreciation.
- Your employer may reimburse you, which affects what you can claim.
If you're self-employed or run a business
You can generally claim the business-use portion of interest, depreciation and running costs, and GST credits if registered. See tax deductions for business vehicle loans.
Novated lease
A novated lease isn't claimed on your tax return. The benefit comes through salary packaging, where some costs are paid from pre-tax income, with fringe benefits tax considerations. Eligible EVs can be FBT-exempt.
Keep records
Whatever method you use, keep a logbook or trip records, receipts and your loan statements showing interest.
Buying a car you'll use for work? Tell us about it in about 60 seconds and a licensed broker will call you. No credit check to enquire.
General information only, based on ATO guidance available in September 2026. This isn't tax advice. Speak to a registered tax agent. Finance the Ride is a referral service and doesn't hold an Australian Credit Licence. Last reviewed September 2026.
About this guide. Written by the Finance the Ride team and last updated . It's general information for Australian borrowers, not financial advice, and doesn't take your circumstances into account. Finance the Ride is a referral service: we don't lend money or hold an Australian Credit Licence. About us