12 Per Cent Of Original Value Method*

This is one of the four substantiation methods for a work-related car expense tax deduction claim.

* this claim method has been discontinued from 1 July 2015

Following changes announced in the 2015 Budget, the 12% and 1/3rd of actual claim methods are no longer available from 1 July 2015. The amending legislation is here.

The following summary reflects the position until 30 June 2015.


This method that involves the least amount of record-keeping effort. However it can only be used when you have a reasonable basis for concluding that at least 5,000 business kilometres has been travelled.

What You Can Claim Using The 12% of Value Method

The allowable claim is generally calculated as 12% of the cost of the car when it was originally acquired by you. This is qualified by the following:

  • If the car is leased, then you use 12% of an arms length market value
  • ‘Cost’ will include dealer charges and stamp duty
  • if you are not registered for GST, then the cost includes GST
  • if you are registered for GST, then the cost is reduced by the amount of the GST credit (the Tax Office assumes a 1/3rd creditable purpose in this case)
  • the maximum that can be claimed is limited to 12% of the luxury car limit
  • if the car was inherited, or received as a gift or prize, then the depreciated value at the time of acquisition is treated as the cost
  • part year ownership, or part year claims, are apportioned by the number of days owned or eligible to claim

In terms of record-keeping, the 12% of value method is pretty light. Obviously you would need to have written evidence supporting the acquisition cost or value of the car; and you are required to have a reasonable basis for concluding that you have travelled more than 5,000 business kilometres.

For other claim methods see Work Related Car Expenses

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This page was last modified on 16 Aug 2017