Electric Car Business Use Australia: ATO Rules & Deductions

Using an electric car for business in Australia comes with real tax advantages — and a few rules you need to understand before claiming. The ATO treats EVs broadly the same as petrol vehicles for expense purposes, but recent policy changes around FBT and instant asset write-off make electric car business use Australia a topic worth understanding properly.

This guide covers the ATO’s position, which deduction method to use, buying versus leasing, and how to set up your records from day one.

Using an electric car for business: the ATO position

The ATO defines a car as a motor vehicle designed to carry fewer than nine passengers or a load of less than one tonne. Most EVs on the market (Tesla Model 3, BYD Seal, Hyundai Ioniq 6, etc.) meet this definition.

Because an EV is a car under the tax rules, the standard expense methods apply:

• Cents per kilometre — 88 cents per km up to 5,000 km per year
• Logbook method — actual expenses (including electricity) times business-use percentage

The main differences for EVs involve:

1. How electricity costs are calculated (no fuel receipts)
2. The FBT exemption for eligible EVs
3. The cost limit applying to depreciation claims

For a full explanation of both methods, see the ATO Car Expense Guide.

Cents per kilometre on an EV (same rate applies)

The 2025-26 cents-per-kilometre rate is 88 cents per km. This rate applies regardless of whether your car runs on petrol, diesel, hydrogen, or electricity.

The rate is designed to cover all running costs — fuel or electricity, servicing, tyres, registration, insurance, and depreciation. You do not add charging costs on top when using this method.

Cents per km is simple if you drive fewer than 5,000 business kilometres per year. Above that cap, you must use the logbook method (or combine both by choosing the most beneficial approach for different vehicles).

To estimate your potential deduction, use the Kilometre Reimbursement Calculator.

Logbook method for electric cars

The logbook method lets you claim the actual costs of running your EV multiplied by your business-use percentage. For electric cars, actual costs include:

• Electricity for charging (calculated from kWh consumption and your tariff rate)
• Servicing and tyres (EVs still need these, though less frequently)
• Registration and insurance
• Lease payments or loan interest
• Depreciation (decline in value), subject to the luxury car tax (LCT) cost limit

Setting up a logbook: You must keep a continuous 12-week logbook recording each work trip’s date, destination, and purpose. An EV logbook works exactly the same as for a petrol vehicle. Once established, the logbook is valid for five years if your driving pattern does not change substantially.

See the full requirements at ATO Logbook Requirements.

Buying vs leasing an EV for business

The choice between buying and leasing has different tax implications.

Buying outright or with a loan:

• You can claim depreciation on the vehicle’s cost (subject to the car cost limit, $69,674 for 2024-25)
• Interest on the loan is deductible proportional to business use
• Eligible for instant asset write-off (see below)

Novated lease (salary sacrifice):

• Employer pays for the vehicle from pre-tax salary
• Under the EV FBT exemption, eligible EVs attract no FBT and no reportable fringe benefit
• This can produce a very large tax saving because lease payments come from pre-tax income
• The employee does not claim car expenses separately

Operating lease or hire:

• Lease or hire payments are deductible in proportion to business use
• GST credits apply on lease payments (if registered for GST)

For most sole traders, outright purchase with a logbook and instant asset write-off is the most straightforward approach. Employees with an employer willing to set up a novated lease should explore the EV FBT exemption at EV FBT Exemption Australia.

EV and instant asset write-off

The instant asset write-off allows eligible businesses to deduct the full cost of a depreciating asset in the year of purchase, rather than over multiple years.

For the 2024-25 income year, the threshold is $20,000 (for small businesses with turnover under $10 million). Most EVs cost significantly more than this, so full instant write-off is unlikely to apply unless the threshold is raised by legislation.

However, for businesses under the general small business depreciation pool rules, vehicles can be added to the pool and depreciated at 15% in the first year and 30% each year after. This is still faster than the standard depreciation schedule.

The car cost limit ($69,674 for 2024-25) caps the amount you can depreciate on a car, regardless of what you paid. EVs priced above this limit have depreciation capped at the limit.

Check the current thresholds with your tax adviser each year, as both the instant asset write-off threshold and car cost limit are adjusted annually.

Setting up tracking from day one

The biggest administrative mistake EV business owners make is starting their records late. Reconstructing trips from memory is unreliable and leaves your deduction open to challenge.

Set up your kilometre tracking the moment you take delivery of your EV:

1. Record the opening odometer reading on delivery day
2. Start logging every business trip — date, start and end points, purpose
3. Save your first electricity bill and note your per-kWh tariff
4. Note the vehicle’s energy consumption from the specification sheet

Tripbook makes this automatic. Open the app before each trip, and it records your route, calculates kilometres, and lets you tag the trip as business or personal. At tax time, you export a full ATO-compliant report with all the data your accountant needs.

If you plan to use the logbook method, begin your 12-week logbook period as early as possible. A logbook started in the first month of ownership is more representative of your actual driving pattern than one started mid-year.

For electric car business use in Australia, the fundamentals are simple: apply the same methods as for any car, use the EV-specific concessions where they apply, and keep your records from the start.

Download Tripbook and start tracking your EV business kilometres today.