FAQ

Vehicle Allowance for Nannies/ Parents: A Simple Guide

If your nanny uses their own car for work-related duties (like school pick-ups, errands, or outings with the children), you should pay them a vehicle allowance to cover petrol and wear and tear.

When Do I Pay a Vehicle Allowance?

You should pay a vehicle allowance when your nanny is:

• Using their own car for work-related duties
• Transporting your children (e.g. daycare or school runs, activities)
• Running errands for your household (e.g. groceries, appointments)

You do not need to pay an allowance if:

• The nanny only drives to and from your home (commuting)
• They use your car for any nanny-related driving

How Much Do I Pay?

As of 2025, the recommended rate is $0.98 per kilometre.

This is based on the Australian Tax Office (ATO) cents-per-kilometre method. It's the simplest and fairest way to calculate reimbursement.

Example:
If your nanny drives 15km for a kindy drop-off and return trip:

• 15 km x $0.98 = $14.70 for that trip.

How Do I Track the Kilometres?

Option 1: Logbook Method
Ask your nanny to record:

• Date
• Trip purpose (e.g. "school pick-up")
• Total kilometres driven

Option 2: Set Weekly Allowance
If they do regular, repeat trips, agree on a flat weekly amount based on average kilometres

How Is It Paid?

• Add it to their regular pay as a reimbursement (label it "Vehicle Allowance – Non-Taxable")
• If you stay at or under $0.98/km, it's not taxable income and doesn't attract superannuation or leave entitlements

Important Reminders

• Keep simple records of payments and/or logs for your own records
• If you pay more than $0.98/km, the extra portion may be taxable
• If the nanny uses your car, you don't need to pay a car allowance—but you do need to pay for fuel, insurance, registration, and maintenance

Can I Just Let Them Use My Car?

Yes. Many families prefer to provide a family car for nanny duties. This:

• Removes the need for tracking km
• Avoids vehicle allowance payments
• Ensures your nanny is covered under your insurance

Quick Reference Table

Situation

Pay Vehicle Allowance?

Nanny uses own car for daycare/school runs. 

Yes

Nanny runs errands in their own car

Yes

Nanny drives to and from your house only

No

Nanny uses your car for everything

No

Common Tax Deductions for Nannies (Australia)

1. Work-related Car Expenses

If you use your own car for work purposes (e.g. driving children to activities, picking up groceries for the family, travelling between jobs), you can claim:

• Cents per kilometre method (up to 5,000km): currently $0.98/km depending on your situation
• OR Logbook method: percentage of actual car expenses (fuel, rego, insurance, servicing, depreciation) if you keep a logbook for 12 weeks

Note: You cannot claim travel to and from your regular workplace (home to job site)

2. Work-related Training & Education

• Courses directly related to your job (e.g. First Aid, Child Protection, Early Childhood Education)
• Books or resources for those courses

3. Working with Children Check / Blue Card

• If you paid for your own check and weren't reimbursed

4. Union or Professional Membership Fees

• e.g. Australian Nanny Association, relevant childcare unions

5. Phone and Internet

• If you use your personal phone or internet for work tasks (scheduling, texts with families, app use), you can claim a work-related percentage of the bill

6. Home Office Expenses

If you do admin work, planning or learning at home (and you're not reimbursed), you can claim a portion of:

• Electricity
• Internet
• Office supplies
  Use a diary or logbook for at least 4 weeks to estimate the percentage

7. Supplies and Resources

• Educational toys, craft materials, books, or subscriptions paid for by you and used for work
  Must be genuinely used for the children in your care and not reimbursed

8. Activity and Outing Costs

If you cover costs for work-related outings and aren't reimbursed by the family, you can claim:

• Entry fees to activities or events (e.g. zoo, swimming lessons, play centres)
• Food and drink purchased for the children
• Public transport fares while escorting children on outings
  Keep itemised receipts and note who the expenses were for

9. Insurance

• Nanny insurance/ public liability or personal accident insurance if you are self-employed

Additional Deductions for Nannies with an ABN (Self-Employed)

If you operate as a sole trader under an ABN, you may also be able to claim:

• Bookkeeping or accounting software (e.g. Xero, QuickBooks, Rounded)
• Business-related stationery or admin costs
• Professional indemnity insurance or financial advice
• Bank fees for business accounts

What You Can't Claim

• Regular clothes (even if worn only for work)
• Food and drink for yourself
• Travel to and from your regular job location
• Costs already reimbursed by your employer

Good Habits for Tax Time

• Keep receipts, invoices, and logbooks
• Record all work-related kilometres
• Use an app or spreadsheet to track expenses throughout the year
• Consult a registered tax agent for tailored advice