You can claim up to 5,000 business kilometres per car each income year using the ATO’s cents per kilometre method, which does not require a logbook. For 2025–26, the rate is 88 cents per kilometre, so the maximum deduction under this method is $4,400 per car.1Australian Taxation Office. Cents per Kilometre Method The rate is set to cover every running cost the car generates, so you don’t calculate fuel, servicing, insurance, or depreciation separately.
How the Calculation Works
Multiply your work-related kilometres for the year, capped at 5,000, by the current rate. Drive 3,200 business kilometres in 2025–26 and the deduction is $2,816. Drive 7,000, and you still claim 5,000 under this method.
The 88-cent rate bundles fuel, registration, insurance, servicing, and depreciation into a single figure. You cannot claim any of those costs on top of the per-kilometre deduction.1Australian Taxation Office. Cents per Kilometre Method
If you use more than one car for work during the year, the 5,000-kilometre cap applies separately to each car. You can also choose a different method for each vehicle, using cents per kilometre for one and the logbook method for another.2Australian Taxation Office. Expenses for a Car You Own or Lease
Which Vehicles Qualify
The ATO’s definition of “car” is narrower than everyday use. Under the Income Tax Assessment Act 1997, a car is a motor vehicle designed to carry a load of less than one tonne and fewer than nine passengers. Motorcycles are explicitly excluded.3Australian Taxation Office. Income Tax Assessment – Cents per Kilometre Deduction Rate for Car Expenses Determination 2022 Sedans, hatchbacks, SUVs, and utes under the one-tonne payload threshold qualify. Heavy trucks, larger passenger vans, and motorcycles do not.
You must also own or lease the vehicle yourself. If your employer provides the car, or it sits inside a salary sacrifice or novated lease arrangement where the employer holds the lease, you generally can’t claim car expenses as a personal deduction. Those arrangements are handled under fringe benefits tax rules by the employer.
Which Trips Count as Business Kilometres
Driving between home and your regular workplace is a private expense, even if the commute is long. The trip puts you in a position to earn income rather than being part of the work itself.4Australian Taxation Office. Trips You Can and Can’t Claim
Trips that do count include driving between workplaces (from your main office to a client site, a secondary branch, or an off-site meeting), driving between separate jobs on the same day where neither is your home, and work errands such as picking up supplies or attending a conference away from your usual workplace.
Narrow Exceptions for Home-to-Work Travel
Three situations let you claim the drive between home and work.4Australian Taxation Office. Trips You Can and Can’t Claim The first is where home is a genuine base of employment: you’re required to start work duties at home and then travel to your regular workplace to continue those same duties. Working from home by choice doesn’t qualify.
The second is transporting bulky tools or equipment that are too awkward in size or weight to take on public transport, are essential for the job, and cannot be securely stored at the workplace. If secure storage is available and you take the tools home by preference, the exception doesn’t apply.
The third is itinerant work, where you have no fixed workplace and regularly travel between multiple sites as a fundamental part of the job. Tradespeople starting each day at different construction sites are a common example. The ATO reads these exceptions strictly, looking at whether the travel itself is part of the work.
Records You Still Need
You don’t need written evidence of every kilometre driven, but “no logbook” is not the same as “no records.” The ATO can ask how you worked out your business kilometres, and you need a reasonable answer.1Australian Taxation Office. Cents per Kilometre Method
Reasonable evidence includes diary entries for specific work trips, calendar records showing client visits, screenshots from a mapping app with distances between locations, and periodic odometer readings. You don’t have to record every trip in real time, but you should be able to reconstruct a defensible estimate. Guessing won’t survive an audit.
Keep whatever records you rely on for at least five years from the date you lodge your return.5Australian Taxation Office. D1 Work-Related Car Expenses 2025
Entering the Claim on Your Return
In myTax, go to the deductions section and select work-related car expenses at item D1. Enter the total business kilometres for each car and choose the cents per kilometre method. The system applies the current rate and calculates the deduction.5Australian Taxation Office. D1 Work-Related Car Expenses 2025
Before submitting, check the tax estimate and confirm the deduction figure looks right. The final declaration that your return is true and correct is not a formality. Penalties for false or misleading statements can reach 25% of any resulting tax shortfall for careless mistakes, 50% for recklessness, and 75% for intentional overclaiming, on top of the tax you owe.6Australian Taxation Office. Penalties for Making False or Misleading Statements
Mistakes That Draw ATO Attention
Car expenses are a perennial ATO focus, and the cents per kilometre method’s simplicity tempts people to round up. Claiming exactly 5,000 kilometres every year with no supporting basis is a red flag. If your actual business driving is closer to 2,000, claim 2,000. The cap is a ceiling, not a target.
Other common errors are treating the home-to-work commute as business travel outside the narrow exceptions, adding fuel or insurance costs on top of the per-kilometre rate, and claiming for a car you don’t own or lease. Where your employer reimburses car expenses, reduce your claim by the reimbursed amount, or exclude those kilometres entirely if the reimbursement covers them.
If you find an error after lodging, voluntary disclosure before the ATO contacts you can cut the base penalty substantially, in some cases by up to 80% or to nil depending on timing and the shortfall involved.6Australian Taxation Office. Penalties for Making False or Misleading Statements
When the Logbook Method Is Worth the Effort
If you regularly drive well over 5,000 business kilometres, the cents per kilometre method leaves money on the table. The logbook method has no kilometre cap and lets you claim the business-use percentage of your actual running costs.
A logbook covers a continuous 12-week period representative of your usual driving, with each trip’s odometer reading, purpose, and business or private status recorded. The resulting business-use percentage then applies to your actual annual expenses, and a valid logbook lasts five years.7Australian Taxation Office. Motor Vehicle Expense Calculation Methods You can switch methods between financial years, so choosing cents per kilometre now doesn’t lock you in for the future.