ATO puts Australians on notice over commonly abused tax deduction: 'We're watching more closely than ever'

Published: 04:24, 9 July 2026 | Updated: 04:24, 9 July 2026 More than 500,000 Australians have received an ATO warning before lodging their tax returns, as the tax office targets commonly rorted work-related car expense claims.  Almost $12 billion in work-related car expenses were claimed last financial year. Under the ATO's cents-per-kilometre method, eligible taxpayers can claim 88 cents per kilometre for up to 5,000km of work-related travel, resulting in a maximum deduction of $4,400. Drivers who travel more than 5,000 work-related kilometres can instead use the logbook method, claiming the work-related share of their actual vehicle expenses by keeping a 12-week logbook and records of their costs. The ATO only allows claims for genuine work-related travel, not the normal commute between home and your regular workplace. Taxpayers can generally claim trips between workplaces, to visit clients, between separate jobs, or to attend work-related meetings, conferences and training. ATO assistant commissioner Anita Challen confirmed the tax office had emailed more than 500,000 taxpayers who had previously claimed car expenses, warning it was closely monitoring incorrect and excessive claims. 'Every year, the ATO looks at areas that taxpayers commonly make mistakes,' she said in a statement. 'We are watching car expense claims more closely than ever and have a strong focus where we think taxpayers might be making incorrect or excessive claims. More than 500,000 Australians have received an ATO warning before lodging their tax returns, as the tax office targets commonly rorted work-related car expense claims ATO assistant commissioner Anita Challen said the tax office was scrutinising work-related car expense claims more closely than ever  'This includes claiming home-to-work and back travel (which is generally treated as private travel) or common patterns like claiming the maximum 5000 kilometres. 'Taxpayers should be paying close attention to this area and ensuring they are only claiming what they are entitled to and have the right records to back their claims,' she said. 'Taxpayers who think they've overclaimed work-related expenses in previous years need to lodge an amendment or speak to their tax professional and ask them to amend their prior year claims.'