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Fuel is one of those costs that builds up quickly, especially if your business relies on driving, deliveries or site visits. With prices higher than they've been in recent months, it's worth making sure you're claiming what you're entitled to — and doing it correctly.
The starting point is simple: you can only claim fuel used for business purposes. That sounds straightforward, but it depends on how your vehicle is used and how well you track it.
If You Use a Vehicle Solely for Business
If the vehicle is owned and used entirely by the business, fuel is generally fully deductible. This typically applies to company-owned vehicles or vans used for operations.
In this case, fuel is treated like any other business expense — but it still needs to be supported by records such as receipts or fuel logs.
If Your Vehicle Is Used for Both Work and Personal Use
This is where most small businesses sit.
You can't claim all fuel costs — only the business-use portion. The Australian Taxation Office (ATO) outlines two main methods for claiming car expenses:
- Logbook method – Track your driving over a representative period (usually 12 weeks) to determine your business-use percentage
- Cents per kilometre method – Claim a set rate per kilometre, up to a capped limit
The logbook method often results in a higher deduction if business use is significant, but it requires more consistent recordkeeping. You can see the full breakdown on the ATO page.
What Counts as Business Travel?
Not all trips qualify.
Generally, you can claim fuel for:
- Travel between job sites or client locations
- Deliveries or transporting goods
- Trips to suppliers or business-related meetings
You usually can't claim:
- Travel between home and your regular place of work
- Personal errands, even if done during the day
The ATO provides clear guidance on what qualifies as business travel, and this category is one of the most common areas where mistakes happen.
Keep Records as You Go
Trying to reconstruct fuel use at tax time rarely works well.
Keep it simple. Save receipts, track kilometres where possible and maintain a basic logbook if you're using that method. Even a small amount of consistent tracking makes a difference.
Final Thoughts
Fuel costs are rising, and claiming them correctly can make a noticeable difference at tax time — but only if your records support it.
If you're unsure which method suits your situation or want to make sure you're claiming correctly, the team at WMC Accounting can help you work through it and keep things clear going forward.
