If you use your own car for work in Australia, the ATO gives you two ways to claim car expenses on your tax return:
- Cents per kilometre
- Logbook method
Which method is best depends on how much you drive for work and how accurately you track your costs. This guide explains both, including the 2025-26 rate (88c per km), recordkeeping, and which trips count.
Your regular commute between home and your usual workplace is not work-related travel. Trips to clients, jobsites, or temporary work locations usually do count.
2025-26 ATO car expense rates at a glance
- Cents per kilometre rate: A$0.88 per km
- Annual cap: 5,000 km per car (cents-per-kilometre method)
- Logbook validity: 5 years (if your driving pattern is similar)
Use the calculator to compare both methods side by side: Kilometre reimbursement calculator
Method 1: Cents per kilometre
The cents-per-kilometre method is simple. You multiply your work-related kilometres by the ATO rate.
- 2025-26 rate: 88 cents per kilometre
- Limit: up to 5,000 km per car per year
This rate already includes running costs like fuel, servicing, registration, insurance, and depreciation. You cannot claim those separately under this method.
What records do you need?
You do not need a full logbook, but you do need a reasonable basis for your kilometres. For example:
- a diary of trips for a representative period
- emails or calendar entries that support business travel
- a running log from a mileage app
Example calculation (cents per kilometre)
If you drove 3,200 km for work during the year:
- 3,200 km × A$0.88 = A$2,816 deduction
If you drove 7,000 km, the cents-per-kilometre method is still capped at 5,000 km:
- 5,000 km × A$0.88 = A$4,400 maximum claim
Method 2: Logbook method
The logbook method lets you claim the business-use percentage of your actual car expenses. It usually works better when you drive more or have high running costs.
To use it, you need:
- a 12-week logbook that is continuous and representative
- start and end odometer readings for the logbook period
- details of each work-related trip (date, purpose, kilometres)
A logbook is valid for up to 5 years, as long as your driving pattern does not change.
What costs can you claim?
Under the logbook method you can claim the business-use portion of your actual expenses, such as:
- fuel and oil
- servicing, tyres, repairs, and maintenance
- registration and insurance
- lease payments or interest on a car loan
- depreciation (decline in value)
You still need receipts for these costs.
Which method should you choose?
- Low kilometres or simple tracking: cents per kilometre
- Higher kilometres and consistent business use: logbook method
- High car costs (repairs, loan, depreciation): logbook method often wins
Not sure? Use the calculator and compare both methods: Kilometre reimbursement calculator
What trips count as work-related travel?
Generally, trips that are directly related to earning income count. Examples include:
- visiting clients or customers
- travelling between job sites
- attending off-site meetings, training, or conferences
- trips from a home office to a client or temporary workplace
These usually do not count:
- commuting between home and your regular workplace
- personal errands, even if you stop at a business location
- holidays or detours for private reasons
Employer allowances vs deductions
If your employer pays a car allowance, it is assessable income and must be declared in your tax return. You can still claim a deduction, but only for the work-related portion you can substantiate.
If your employer reimburses your car expenses, you generally cannot claim those same expenses again.
Sole traders and contractors
As a sole trader, you can claim car expenses for business travel even if you are not reimbursed by anyone. The key is having records that show the kilometres and the business purpose. Most sole traders choose:
- cents per kilometre for simplicity, or
- logbook for a larger deduction when business use is high
A consistent trip log makes claims easier to support if the ATO asks for evidence.
Common mistakes to avoid
- claiming more than 5,000 km under the cents-per-kilometre method
- mixing private and business kilometres without evidence
- claiming actual expenses and cents per kilometre for the same car
- missing receipts or odometer readings for the logbook method
Keep records either way
Whatever method you pick, keep basic evidence of your work-related travel. A simple app log with date, destination, and purpose is often enough and makes your claim easy to support.
Need a tracking setup? Start here: Kilometre tracking guide
