There are pro's and cons when it comes to car allowances. I am a corporate accountant in a company which has a fleet of 33 company cars. The amount of administration involved regarding log books, FBT, servicing, accidents etc etc is painful. The on-costs (costs above the monthly lease commitment) can be astronomical. By the time you pay the monthly lease cost for the car (approx $530ish for a Corolla), Fuel, Insurance, FBT for private use et al plus the time for my team to maintain the records, giving someone an allowance seems like a great idea. The issue is when the allowance greatly exceeds the running costs of the employees private vehicle, and this then effectively increases their taxable income, therefore possibly pushing them in to a higher income tax bracket. Also take into consideration the extra kilometers will do to your vehicle in terms of depreciation. If you can continually lease, use and sell vehicles and the allowance covers the cost then you will always be driving a relatively new vehicle and do quite well. My advice would be to seek professional taxation advice from a qualified accountant, let him or her do the maths and advise you correctly on the best avenue for you.