Cents per kilometre method
A simplified way to claim work car costs at a set rate per kilometre, capped at 5,000 km a year.
The cents per kilometre method pays a flat rate for each work-related kilometre driven, covering fuel, servicing, insurance, registration and depreciation in one figure. The rate is 88 cents for FY2025-26.
The claim is capped at 5,000 business kilometres per car per year, giving a maximum of $4,400 at the current rate. No receipts are required, but you must be able to show how you worked out the kilometres.
Beyond 5,000 kilometres the logbook method is the alternative. It requires a twelve-week logbook and records of actual expenses, but has no cap and usually produces a larger claim for heavy business users.
Hitting the cap
Driving 4,200 work kilometres at 88 cents gives a $3,696 deduction. Driving 9,000 still caps at 5,000 kilometres and $4,400 unless you switch to the logbook method.
The bit people get wrong
Travel between home and your regular workplace is private and does not count, no matter how far it is. Only travel between workplaces, to clients, or carrying bulky tools generally qualifies.
Common questions
What is the rate for FY2025-26?
88 cents per kilometre, up from earlier years. It rises to 91 cents for FY2026-27 under the current determination.
Do I need a logbook for this method?
Not a formal twelve-week logbook, but you must be able to demonstrate how you calculated the kilometres, such as a diary of trips.
Which method should I use?
Cents per kilometre suits light users and requires little record keeping. The logbook method usually produces more for anyone regularly exceeding 5,000 business kilometres.
Run your own numbers