Tax Deductions for Driving Instructors in Australia
Running a driving instruction business in Australia comes with legitimate tax deductions that many instructors miss. Here's what you can typically claim.
Driving instructors in Australia operate as self-employed individuals or small business owners, which means they're entitled to claim a range of legitimate business deductions. Understanding what you can claim reduces your tax bill and is simply part of running your business properly.
This article covers common deductions available to driving instructors, but tax law is complex and changes over time. Always consult a registered tax agent for advice specific to your situation.
Vehicle Expenses
Your vehicle is your primary business tool, and vehicle-related expenses are typically the largest deduction available to driving instructors.
There are two methods for claiming vehicle expenses:
Cents per kilometre method: You can claim a set rate per business kilometre driven (the ATO sets this rate each year — check the current rate on ato.gov.au). This method requires you to keep a record of business kilometres and is simpler to administer.
Logbook method: You maintain a logbook for a minimum of 12 weeks to establish your percentage of business use, then claim that percentage of all actual vehicle expenses. This method usually delivers a larger deduction if business use is high, but requires more record-keeping.
For most full-time driving instructors whose car is used almost exclusively for teaching, the logbook method typically produces a better result.
Deductible vehicle expenses include:
- Fuel
- Insurance (comprehensive and third party)
- Registration
- Servicing and repairs
- Tyres
- Depreciation (if you own the vehicle)
- Lease payments (if you lease)
- Car loan interest (if applicable)
Professional Development and Training
Costs to maintain or improve skills directly related to your work as a driving instructor are deductible. This includes:
- Industry courses and certifications
- First aid training renewal
- Attendance at industry seminars or events
- Relevant books and publications
The key test is whether the expense is directly related to your current income-producing work as a driving instructor.
Software and Technology
Subscription costs for software used in your business are deductible. If you use DriveBook to manage your bookings and students, your subscription fee is a business expense.
Other deductible software costs might include:
- Accounting or invoicing software
- Scheduling tools
- Communication tools used for business
Keep records of these subscriptions and what they're used for.
Phone and Internet
If you use your phone and internet for business purposes, you can claim the business-use portion. Most instructors use their phone for booking calls, messaging students, and managing their calendar — this is clearly business use.
If you have a single phone plan used for both business and personal use, you need to estimate the business percentage and claim only that portion. Keep records to support your estimate.
Equipment and Supplies
Deductible equipment expenses may include:
- Dual controls fitted to your vehicle
- Instructor mirrors
- Learner signs (L plates)
- Business stationery and printing
- Marketing materials
For items costing more than $300, you may need to depreciate them over their effective life rather than claiming the full amount immediately — though small business depreciation rules may allow immediate write-offs up to certain thresholds. Check current thresholds with a tax agent.
Insurance
Business insurance premiums are deductible, including:
- Professional indemnity insurance
- Public liability insurance
- Income protection insurance (subject to specific rules)
Note that income protection insurance deductibility rules are different from other business expenses — consult a tax agent.
Home Office
If you do administrative work from home (record-keeping, responding to booking enquiries, managing your schedule), you may be able to claim a home office deduction. The ATO provides a fixed-rate method and an actual cost method for this.
Keep records of hours spent working from home if you plan to claim this.
What You Can't Claim
Not all expenses are deductible. You cannot claim:
- Personal expenses unrelated to your business
- Fines (parking fines, traffic infringements)
- Private travel in your vehicle
- The costs of getting your initial driving instructor licence if you weren't already in the profession
Record-Keeping
To claim any deduction, you need to be able to substantiate it. Keep receipts, bank statements, and business records for at least five years. Good record-keeping throughout the year makes tax time significantly less stressful.
This article is general in nature. Tax laws change and your circumstances are unique. Speak with a registered tax agent or accountant for advice specific to your business.
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