Car and Vehicle Expense Deductions: the Cents Per Kilometre and Logbook Methods

These two methods apply to a car, which the ATO defines as a vehicle designed to carry a load of less than one tonne and fewer than nine passengers. Larger vehicles such as one tonne utes and vans, motorcycles, and vehicles that carry nine or more passengers use a different approach based on actual costs. Work related trips include driving between separate workplaces, travelling to see clients or suppliers, and travelling between two different jobs. Your ordinary trip between home and your regular workplace is private travel and is not deductible, even if you do small work tasks on the way or travel outside normal hours. Only work related kilometres can be claimed.

This is the simpler method. You multiply your work related kilometres by a set rate, and the rate covers all of your car running costs, including fuel, servicing, registration, insurance and the decline in value of the car. Because the rate already includes these, you cannot claim them separately. The rate for the 2025 to 2026 year, the return most people are lodging now, is 88 cents per kilometre. For the 2026 to 2027 year, which began on 1 July 2026, the rate rose to 91 cents per kilometre. You can claim a maximum of 5,000 work related kilometres per car each year with this method. At 88 cents that is a maximum of 4,400 dollars, and at 91 cents it is a maximum of 4,550 dollars. You do not need a logbook, but you must be able to show how you worked out your kilometres, for example with a diary or calendar of the trips. A rough guess on its own is not enough.

The logbook method lets you claim the work related percentage of your actual car expenses, with no cap on kilometres. You can include fuel and oil, servicing and repairs, registration, insurance, interest on a car loan or lease payments, and the decline in value of the car. You work out your work related percentage by keeping a logbook for a continuous period of at least 12 weeks that records each trip's date, its purpose, and the odometer readings at the start and end. You also record the odometer reading at the start and end of the income year. Your business use percentage is your work related kilometres divided by your total kilometres over the logbook period. A logbook is generally valid for five years, so you do not need a new one every year unless your pattern of use changes. You need to keep receipts for your car expenses, although fuel and oil can be estimated from odometer readings if you do not keep every receipt.

If you drive a moderate number of work kilometres, the cents per kilometre method is simple and needs fewer records. If you drive a lot for work, or your car is expensive to run, the logbook method often gives a larger deduction because it is not capped at 5,000 kilometres. You can work out both and use whichever is larger, as long as you keep the records that method requires. You can also use different methods for different cars, and change method from year to year.

Example only. A person drives 3,500 kilometres for work during the 2026 to 2027 year and keeps a diary of the trips. Under the cents per kilometre method their deduction is 3,500 kilometres times 91 cents, which is 3,185 dollars. If instead they drove 9,000 work related kilometres, the cents per kilometre method would cap their claim at 5,000 kilometres, giving 4,550 dollars, and the logbook method might produce a larger deduction. This is an example only. Use the Car Logbook tool to track your own trips and business use.

For the cents per kilometre method, keep a record of how you worked out your work related kilometres, such as a diary or calendar showing the trips. For the logbook method, keep your 12 week logbook, your odometer readings, and receipts for your car expenses. Keep your records for five years from when you lodge. If your employer reimburses a specific car expense, you cannot also claim that expense. A car allowance is treated differently: it is included in your assessable income, and you can still claim your work related car expenses separately.

What is the cents per kilometre rate?

It is 88 cents for the 2025 to 2026 year and 91 cents for the 2026 to 2027 year, up to 5,000 work related kilometres per car.

Can I claim my drive to work?

No. Ordinary travel between home and your regular workplace is private and not deductible. Trips between workplaces or to see clients can be claimed.

Do I need a logbook for the cents per kilometre method?

No, but you must be able to show how you worked out your kilometres, for example with a diary. Estimates without a reasonable basis are not accepted.

How long is a logbook valid?

Generally five years, unless your pattern of car use changes, in which case you need a new one.

Can I claim fuel and registration on top of the cents per kilometre rate?

No. That rate already covers fuel, servicing, registration, insurance and the car's decline in value. To claim actual expenses, use the logbook method instead.

What if I drive a ute or a motorbike?

Vehicles that are not cars, such as a one tonne ute or a motorcycle, use a method based on actual work related costs rather than these two methods.