ATO Car Expenses for Nurses and Healthcare Workers: Employed vs Contractor
Nurses and healthcare workers who use their own car for work claim car expenses under the ATO's cents-per-km method at 91 cents per business kilometre for 2026-27 (from 1 July 2026), capped at 5,000 km for a maximum of 5,000 x 0.91 = $4,550, or under the logbook method with no cap. Where you claim depends on whether you are an employee or an ABN contractor, and community and agency nurses with large caseloads often pass the 5,000 km cap by August, which makes the logbook method the better choice.
The fork: employed nurse vs ABN contractor
An employed nurse - on a hospital, clinic, or agency payroll receiving a payslip and PAYG withholding - claims work-related car expenses at item D1 on the myTax individual return. This is the employee section for using your own car for work when you are not fully reimbursed by your employer.
A nurse working as an independent contractor under an ABN - some agency, community, and locum arrangements - is running a business, so car expenses are claimed on the myTax business schedule alongside other business deductions, not at item D1. If you do both (employed shifts plus ABN contract work), track the two sets of trips separately so each set of car expenses lands in the correct part of the return. Our sole trader car expenses guide covers the business-schedule route in detail.
Which trips a nurse can claim
Travel between workplaces on the same day is deductible: driving from one hospital or clinic to another, or from a base to patients' homes. For a community or district nurse, travel from a base to patient visits and between patients is business travel. Carrying bulky equipment that you cannot leave at work can also make home-to-work travel claimable in limited circumstances.
Ordinary commuting - home to a single regular workplace and back - is not deductible, even if you work unsociable shifts or there is no public transport. The ATO applies this consistently. Community nurses whose role is inherently mobile have the strongest position for counting travel from home to the first patient; keep notes documenting the arrangement. ATO guidance on work-related car expenses is at ato.gov.au.
The 5,000 km cap and why community nurses pass it early
The cents-per-km method caps the claim at 5,000 business kilometres per car per financial year (1 July to 30 June), for a maximum deduction of 5,000 x 0.91 = $4,550 at the 2026-27 rate. The 2025-26 rate was 88 cents, giving a $4,400 maximum, and applies only to trips before 1 July 2026.
A community or agency nurse covering a wide catchment can drive 5,000 business kilometres within the first six or seven weeks of the financial year. At, say, 700 business kilometres a week, the cap is reached in mid-August, and every business kilometre after that produces no further deduction under the cents-per-km method. That is exactly the situation the logbook method solves, because it has no kilometre cap. Our ATO logbook method guide explains the 12-week process.
Worked example: both methods for a community nurse
A community nurse drives 11,000 business kilometres visiting patients across the year. Under the cents-per-km method the claim is capped at 5,000 km: 5,000 x 0.91 = $4,550. The remaining 6,000 kilometres produce no deduction under this method.
Under the logbook method, suppose a 12-week log establishes a 65 percent business-use percentage and total annual car costs (fuel, insurance, registration, servicing, and depreciation) of $10,000. The deduction is 10,000 x 0.65 = $6,500 - $1,950 more than the capped cents-per-km figure. For a nurse who passes 5,000 business km, the logbook method typically produces the larger claim, which is why keeping the 12-week log is worth the effort.
Records the ATO expects
For cents-per-km, keep written evidence of each business trip: date, destination or area, business purpose, and kilometres. For the logbook method, log every trip during the 12-week representative period with date, destination, purpose, and odometer or trip kilometres, plus receipts for actual vehicle expenses across the full year. Keep records for five years from lodgement.
A caseload of many short patient visits is exactly where auto-tracking helps, because each visit is a separate trip and manual logging is easy to skip. An app that records every trip and lets you tag the purpose keeps the log contemporaneous. This is general information about the ATO rules, not personal tax advice; a registered tax agent can confirm your position.
FAQ
I am an employed nurse. Where do I claim car expenses?
At item D1, work-related car expenses, on your myTax individual return, if you use your own car for work and are not fully reimbursed. You choose the cents-per-km method (91 cents for 2026-27, capped at 5,000 km / $4,550) or the logbook method (no cap). If you also do ABN contract work, those trips go on the business schedule instead.
I do agency shifts under an ABN. Is that different?
Yes. Working under an ABN means you are running a business, so car expenses for that work are claimed on the myTax business schedule, not at item D1. The same two methods apply. If you have both employed and ABN work, keep the two sets of trips separate.
I hit 5,000 km in August. What should I do?
Switch your thinking to the logbook method. The cents-per-km method caps at 5,000 km ($4,550 at the 2026-27 rate), so once you pass it early in the year, every further business kilometre is unclaimed under that method. A 12-week logbook establishes a business-use percentage you apply to all your car costs, with no cap, and usually produces a larger deduction for a high-mileage community nurse.
Is my drive from home to the hospital deductible?
Home to a single regular workplace is ordinary commuting and is not deductible, even on night shifts. Travel between workplaces on the same day, and travel from a base to patients for a community nurse, is business travel. If your role is inherently mobile with no single fixed workplace, the case for counting the first trip is stronger; keep notes documenting it. This is general guidance, not advice for your specific situation.
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