Tax season often catches delivery drivers off guard. Unlike traditional employees, independent drivers and gig workers have the responsibility—and opportunity—to claim deductions that significantly reduce their tax burden. Whether you're in Australia, the US, UK, or Canada, understanding which expenses are deductible can save you thousands when you file. This guide covers Australian examples with specific tax links and guidance for all four countries.
1. Vehicle & Mileage Deductions
🇦🇺 Australia - ATO Vehicle Deductions
The Australian Taxation Office (ATO) allows delivery drivers to deduct vehicle expenses at a fixed rate or claim actual expenses.
Fixed Rate (2025-2026): AUD $0.72 per kilometre
For a driver covering 120 km daily (30,000 km/year), that's $21,600 in deductions annually. At a 37% tax rate, that saves $7,992.
Actual Expenses Method: Fuel, maintenance, tyres, insurance, registration, depreciation (capital works).
→ ATO Vehicle Deductions Guide🇺🇸 United States - IRS Mileage Deduction
The IRS allows self-employed drivers to deduct business mileage.
Standard Mileage Rate (2025): $0.67 per mile
For 30,000 miles/year, that's $20,100 in deductions. At a 32% self-employment tax rate, that saves approximately $6,432.
Alternative: Claim actual expenses (fuel, maintenance, insurance, depreciation).
→ IRS Vehicle Expenses Guide🇬🇧 United Kingdom - HMRC Mileage Allowance
HMRC sets fixed mileage allowance for self-employed drivers.
Current Rate: £0.45 per mile (first 10,000 miles)
For 30,000 business miles/year: 10,000 × £0.45 = £4,500 deduction. At a 20% tax rate, saves £900.
Above 10,000 miles: £0.25 per mile for additional mileage.
→ HMRC Mileage Allowances🇨🇦 Canada - CRA Motor Vehicle Expenses
Canada Revenue Agency allows self-employed individuals to deduct motor vehicle expenses.
Methods: Actual Expenses or Simplified Vehicle Expense Rate
Actual Expenses: Gas, maintenance, insurance, repairs, depreciation (capital cost allowance).
For a driver with $8,000 annual vehicle expenses (fuel, insurance, maintenance) at a 53.5% combined tax rate (Fed + Provincial), that saves approximately $4,280.
→ CRA Motor Vehicle ExpensesHow to track: Use apps like MileIQ, Stride Health, or Everlance that automatically log GPS data. Keep a paper logbook as backup with: date, start/end odometer, destination, business purpose, and total km/miles driven.
2. Vehicle Operating Expenses (When Claiming Actual Costs)
Instead of fixed-rate deductions, you can claim all actual vehicle expenses. This often pays better for high-mileage drivers. Deductible expenses include:
- Fuel (petrol/diesel): Every litre/gallon for delivery work
- Maintenance & repairs: Oil changes, tyre repairs, brake pads, air filters, spark plugs
- New tyres: Replacement tyres for delivery vehicle
- Vehicle insurance: Commercial or business-use cover is fully deductible
- Registration & licensing: Annual vehicle registration and permits
- Vehicle depreciation: Capital depreciation if you purchased the vehicle for delivery (ATO, IRS, CRA rules)
- Mechanical work: Repairs directly related to delivery operations
- Parking & tolls: Fees for business deliveries (not personal parking fines)
Australian Example: You spend AUD $450 on fuel monthly (AUD $5,400/year), AUD $800 on maintenance, AUD $1,200 on insurance = AUD $7,400 total. At 37% tax rate, saves AUD $2,738 annually.
3. Phone & Internet Bills (Business Percentage)
Your phone is essential for receiving delivery requests, communicating with dispatch, navigating routes, and contacting customers. A portion of your phone bill is deductible.
How to calculate it: Estimate what percentage of your phone use is business. If you use your phone 80% for deliveries and 20% for personal use, you deduct 80% of your bill.
Example: If your phone bill is £50/month (£600/year) and 75% is business use, you deduct £450/year.
Internet bills are only deductible if you use them for business (e.g., filing taxes, communicating with customers). A home office internet connection that supports your delivery business is partially deductible.
4. Meals & Vehicle Snacks (Limited Deduction)
Meals eaten while working are only 50% deductible for self-employed individuals (this is a tax rule). However, beverages and snacks specifically purchased to sustain you during long routes (energy drinks, protein bars) may be 100% deductible as supplies.
Example: A £5 energy drink purchased for a 12-hour shift might be 100% deductible as a business supply. A £15 lunch at a restaurant is only 50% deductible.
Keep receipts and note the purpose (e.g., "Energy drink for 10-hour delivery route").
5. Equipment & Uniforms
Items purchased specifically for work are deductible:
- • Uniforms: Driver vests, branded clothing (if not suitable for everyday wear)
- • Safety gear: Reflective vests, safety shoes with steel toes
- • GPS devices: Standalone GPS units (your phone's GPS is covered under the phone bill)
- • Delivery bags & equipment: Insulated bags, package scanners, hand carts
- • Tools: Utility knives, flashlights, door wedges
6. Vehicle Loan Interest & Financing
If you financed your delivery vehicle with a loan, the interest portion (not the principal) is deductible. Only the business-use percentage of the loan interest qualifies.
Example: You financed a van with a £20,000 loan at 5% interest (£1,000/year). If the van is 100% used for delivery, you deduct the full £1,000. If it's 80% business and 20% personal, you deduct £800.
7. Office Supplies & Technology
Supplies used to manage your delivery business are deductible:
- • Printer ink and paper (for receipts, invoices)
- • Software subscriptions (route planning apps, accounting software, Routed, etc.)
- • Computer equipment (if used primarily for business)
- • Notebooks and pens (for tracking deliveries)
Deductions You Can't Claim
- Personal commute: Driving to work (your first delivery) is not deductible. However, driving FROM work to your next delivery IS deductible.
- Traffic tickets & parking violations: Penalties are not deductible.
- Expired meters & towing fees: Not deductible (they're personal carelessness).
- Car washes & detailing: General maintenance and appearance are not deductible.
- Entertainment & gifts for customers: Limited deductions (and must comply with strict rules).
Maximizing Your Deductions: Record-Keeping Best Practices
1. Use Digital Tools
Apps like Stride Health, MileIQ, or Everlance automatically track miles and expenses. This removes guesswork and creates a digital paper trail that survives an audit.
2. Keep All Receipts
Save every fuel receipt, maintenance bill, tire replacement, and insurance invoice. Organize by category (fuel, maintenance, insurance, etc.). Keep them for at least 3-7 years in case of audit.
3. Create a Logbook
A simple spreadsheet tracking dates, miles, fuel costs, and expenses is more defensible than memory. The IRS likes seeing organized records.
4. Separate Business & Personal
Use a dedicated business credit card or bank account for delivery expenses. This makes tax time SO much easier and looks professional to the IRS.
Don't Leave Money on the Table
Many drivers claim only mileage and miss out on thousands in additional deductions.
💰 Estimated Annual Tax Savings by Country
- Australia: Average driver claims AUD $12,000-18,000 in total deductions, saving AUD $4,440-6,660 in taxes
- United States: Average driver claims $10,000-16,000 in total deductions, saving $3,200-5,120 in taxes
- United Kingdom: Average driver claims £6,000-10,000 in total deductions, saving £1,200-2,000 in taxes
- Canada: Average driver claims CAD $8,000-12,000 in total deductions, saving CAD $4,280-6,420 in taxes
Take time to track your expenses properly throughout the year. The effort pays off dramatically at tax time—and may save you more than you think.