The motor vehicle allowance for 2023-24 is $0.78 cents per kilometre.

The motor vehicle exempt rate is aligned with the rate determined by the Federal Commissioner of Taxation for the previous financial year (that is, the rate used in 2023-24 is the Australian Taxation Office 2022-23 rate).

A motor vehicle allowance paid or payable to an employee is taxable only to the extent that it exceeds the exempt rate per kilometre, or an amount calculated as the exempt component.

For motor vehicle allowances to apply the vehicle must be the employee's own vehicle and the distance travelled must be for business purposes.

To claim the allowance the distance must be substantiated. This can be done either by:

  • a continuous recording method during the financial year
  • the Australian Taxation Office 12-week averaging method (can be used for 5 years)
  • writing down the odometer reading at the start and end of the journey.

If the number of business kilometres can not be substantiated using one of the 3 methods described above, the full allowance will be taxable.

Motor vehicle allowance paid as a flat or fixed amount

A motor vehicle allowance which is paid as a flat or fixed amount is not an exempt car expense payment benefit for Fringe Benefit Tax purposes.

Where there are no records confirming the business kilometres travelled, the total of the motor vehicle allowance is subject to payroll tax. For example, a regular travelling allowance of $200 per month, paid to a sales person who keeps no records of the business use of his or her private motor vehicle, is taxable in full.

Where an employer maintains records to substantiate the business kilometres travelled in the period covered by the allowance, the exempt component may be calculated. The amount of a motor vehicle allowance paid up to the exempt component is exempt. Where the allowance exceeds the exempt component, only the amount in excess of the exempt component is taxable.

Calculating the exempt component

The exempt component for motor vehicle allowances is calculated as follows:

E = K x R

where:

E =

the exempt component

K =

the number of business kilometres travelled during the financial year

R =

the exempt rate

The example below shows you how you would calculate the exempt portion of the motor vehicle allowance for 2023-24.

Example 1

Fixed allowance amount:

$200

Business kilometres travelled:

100km

Less exempt component (100km x 78 cents):

$78

Taxable portion of allowance:

$122

A list of motor vehicle allowances for previous years is available on our Rates and Thresholds page.