do you use your ute for work? You may be able to claim vehicle expenses on tax. But the amount you can claim depends on what type of vehicle you have, how you use it, and whether you’re an employee or running a business.
For tradies, one question matters before almost anything else:
Is your ute a “car” for tax purposes?
That distinction determines which deduction methods you can use and can also affect GST and FBT.
This guide covers the key rules for 2026–27, including the current 91-cent-per-kilometre rate.
This guide reflects the rules checked as at 18 August 2026. Tax laws and thresholds can change, so check the rules applying to your specific situation before lodging your return.
First: Is Your Ute a “Car”?
For tax purposes, a vehicle is generally a car if it is designed to carry:
- less than one tonne of load, and
- fewer than nine passengers.
A vehicle designed to carry one tonne or more is generally treated as a vehicle other than a car.
This matters because employees can use the ATO’s cents-per-kilometre or logbook methods for cars. Those methods don’t apply to vehicles such as one-tonne-plus utes.
Don’t assume that every dual-cab ute is automatically a one-tonne vehicle. The carrying capacity of the actual vehicle needs to be considered.
If You’re an Employee: How Do You Claim Your Ute?
If your ute is classified as a car, you generally have two methods available.
1. Cents-per-kilometre method
For 2026–27, the rate is 91 cents per work-related kilometre, capped at 5,000 kilometres. That means the maximum deduction under this method is:
5,000 × $0.91 = $4,550
You don’t separately claim fuel, registration, insurance, servicing or depreciation because those running costs are incorporated into the rate. You do, however, need records showing how you worked out your work-related kilometres.
This method can be convenient when you have a relatively modest amount of work-related driving.
2. Logbook method
The logbook method lets you claim a percentage of your actual vehicle expenses based on your work-related use.
Depending on your circumstances, these can include:
- fuel and oil
- registration
- insurance
- repairs and servicing
- tyres
- depreciation
- eligible finance interest.
You generally need a logbook covering a continuous 12-week period. A valid logbook can generally be used for up to five years while your travel pattern remains representative.
For example, if your logbook establishes that 75% of your travel is work-related, and your eligible annual vehicle expenses are $14,000, your potential work-related deduction would be $10,500.
What If My Ute Has a One-Tonne-Plus Payload?
This is where things change.
If your ute is a vehicle other than a car, an employee can’t use the cents-per-kilometre or car logbook methods.
Instead, you generally claim the actual work-related costs of the vehicle and need records supporting your work-related use.
You don’t need the formal 12-week car logbook, but a trip diary or electronic mileage record can be a useful way to demonstrate how you calculated your work-related percentage.
This distinction is particularly important for tradies because two vehicles that look similar can have very different tax treatment.
Can I Claim Ute Registration, Fuel and Repairs?
Potentially, yes.
Under the actual-cost approach, eligible vehicle expenses can include registration, fuel, insurance, servicing, repairs and tyres, together with relevant depreciation and finance interest.
But you generally can’t claim the private portion.
So if you use your ute 80% for work and 20% privately, you generally need to apportion the claim accordingly.
Under the cents-per-kilometre method, you cannot separately claim these running costs because they’re already incorporated into the rate.
What About Driving From Home to Work?
Your normal trip from home to your regular workplace is generally private travel.
Simply carrying tools doesn’t automatically turn your commute into a deductible work trip.
There are limited exceptions, including certain travel between changing workplaces and situations involving essential bulky equipment where transporting it is a practical necessity.
So don’t rely on a blanket “I carry tools, therefore my commute is deductible” rule.
What About Tools in the Ute?
Your tools are separate from the vehicle deduction. For example, a tradie might have:
Ute expenses: fuel, registration, insurance, repairs and depreciation.
Tool expenses: drills, specialised equipment, diagnostic devices and other work assets.
Each needs to be considered under the relevant deduction or depreciation rules.
If you’re a tradie, it’s worth looking at your vehicle costs alongside your other business expenses. Our accountants for tradies service covers the wider tax and accounting issues that can affect your business.
What If My Business Owns the Ute?
If you’re a sole trader or operate through a company or trust, the rules are different from those for an employee.
Your business may be able to claim eligible vehicle costs such as fuel, registration, insurance, repairs, servicing, finance interest, depreciation or other applicable capital deductions.
The business-use percentage still matters. GST-registered businesses should also consider their input tax credits.
For passenger cars subject to the car limit, the 2026–27 car limit is $69,883. A vehicle that is not a car isn’t subject to that passenger-car limit in the same way.
If you’re buying a significant vehicle or equipment for your business, it’s worth considering the tax treatment before you sign the paperwork rather than trying to work it out at tax time.
What About GST on a Ute?
If your business is GST-registered and the purchase qualifies for a GST credit, you may be able to claim the GST relating to the business use of the vehicle.
For a passenger car subject to the 2026–27 car limit, the maximum GST credit is generally $6,353, based on the $69,883 limit.
The car limit does not generally apply to vehicles that are not cars.
The amount you can claim still depends on the normal GST rules and the vehicle’s business use.
What About FBT on a Company Ute?
FBT is relevant when an employer provides a vehicle to an employee or makes it available for private use.
Certain work-oriented vehicles can qualify for an FBT exemption where the employee’s private use is restricted to permitted categories such as home-to-work travel, employment-related travel and minor, infrequent and irregular private use. (ATO)
This is why you shouldn’t simply assume:
“It’s a ute, so there is no FBT.”
The vehicle’s specifications and the way it is actually used both matter.
If your company owns the ute and you also use it privately as a director or employee, it’s worth checking the FBT position before assuming the vehicle is exempt.
A sole trader does not have an FBT liability on their own vehicle because FBT applies to benefits provided by an employer.
What About the Instant Asset Write-Off?
This is another area where older articles can quickly become outdated.
The $20,000 small-business instant asset write-off applied through 30 June 2026 under the temporary rules. The proposed extension from 1 July 2026 should not be treated as settled law without checking the legislation applying at the time of the purchase.
For a business purchasing a ute, the correct treatment can depend on:
- when the vehicle was first used or installed ready for use
- your business’s aggregated turnover
- the vehicle’s cost
- whether the vehicle qualifies for the relevant depreciation concession
- the legislation in force for that income year.
For businesses looking at a major purchase, our business asset depreciation calculator can help you understand the numbers before you make a decision.
What Records Should You Keep?
Good records make vehicle claims much easier to defend.
Depending on your situation, keep:
- Employee using cents-per-kilometre: records supporting your work-related kilometres.
- Employee using the logbook method: the 12-week logbook, odometer readings and records of actual vehicle costs.
- Employee using a one-tonne-plus vehicle: records of actual expenses and evidence supporting your work-related percentage.
- Business owner: purchase documents, finance records, GST records, running-cost receipts and records supporting business use.
Electronic trip records can also help demonstrate how you calculated your work-related kilometres.
The Mistakes That Cost Tradies Money
The biggest problems usually aren’t complicated tax tricks. They’re simple mistakes:
- Claiming 100% of a mixed-use ute – private use generally needs to be excluded.
- Assuming every ute uses the same tax method – check the vehicle’s carrying capacity first.
- Using the wrong cents-per-kilometre rate – for 2026–27, it’s 91 cents, not the older 88-cent rate.
- Claiming loan repayments instead of interest – the principal component isn’t itself a deductible expense.
- Assuming all home-to-work travel is deductible because tools are in the tray – the bulky-equipment exception has specific conditions.
- Assuming a ute is automatically FBT-free – the vehicle and its actual private use both matter.
- Forgetting GST – GST-registered businesses should consider their input tax credits when purchasing and operating a vehicle.
So, Can You Claim Your Ute on Tax?
Yes, potentially — but there isn’t one “ute tax deduction” that applies to everyone.
Your answer starts with three questions:
- What type of vehicle is it?
- Are you an employee or a business owner?
- How much of your vehicle use is genuinely work or business related?
For employees with a car, the choice may be between 91 cents per kilometre and the logbook method.
For employees with a one-tonne-plus ute, the calculation generally moves to actual work-related costs.
For businesses, you need to consider running costs, depreciation, GST and potentially FBT.
Getting that distinction right can make a significant difference to the amount you claim — and to whether the claim stands up if the ATO asks questions.
Get Your Ute Tax Deduction Right
Your ute can be one of the biggest costs associated with your trade. The right tax treatment can help you claim the deductions you’re genuinely entitled to without creating unnecessary risk.
At KSH TAX, we work with tradies and small-business owners across Perth and WA to handle vehicle deductions, depreciation, GST, FBT and broader tax planning.
Talk to KSH TAX or call 08 6285 8110 to discuss your vehicle and tax position.
