To claim kilometres on tax in Australia, you choose one of two methods when you lodge: the cents-per-kilometre flat rate, set at 88 cents for the 2025-26 income year and capped at 5,000 business kilometres, or the logbook method, which applies your business-use percentage to the car’s actual running costs. The right pick depends on how far you drive for work and whether you want to keep receipts for every expense.
Which Trips Count as Work Travel
The ATO treats travel between home and your regular workplace as private, no matter how long the drive is or what hours you keep. A deduction only applies when the driving itself is part of doing the job.
Trips that qualify include:
- Driving between two workplaces, such as your main office to a client site, a second branch, or a supplier.
- Travelling from home to an alternative workplace your employer has sent you to, rather than your usual office.
- Itinerant work with no fixed workplace, such as a tradesperson moving between sites each day.
- Carrying bulky tools or equipment when there is no secure storage at work and you have no practical choice but to transport them in your car.
Outside those limited exceptions, the daily commute stays private.
The vehicle also has to qualify. It must be a car you own, lease, or hold under hire-purchase. You do not have to be the registered owner, but you do need to show you are the actual owner or lessee. Motorcycles, utes with a carrying capacity of one tonne or more, and vehicles seating nine or more passengers are not “cars” for these rules and fall under different provisions.1Australian Taxation Office. D1 Work-Related Car Expenses 2025
Cents Per Kilometre Method
The flat rate rolls every running cost into a single per-kilometre figure: fuel, registration, insurance, depreciation, servicing, and tyres. For the 2025-26 income year the rate is 88 cents per kilometre.2Australian Taxation Office. Cents Per Kilometre Method Multiply that rate by your work-related kilometres and the result is your deduction.
The cap is 5,000 business kilometres per car, per year. At 88 cents, that puts the maximum deduction under this method at $4,400 for a single car. You do not need written evidence of every kilometre, but the ATO can ask you to explain your figure. Diary entries, a spreadsheet of regular trips, or a sample calculation showing the distance of your usual routes will work.2Australian Taxation Office. Cents Per Kilometre Method
This suits drivers whose work travel is modest or predictable. If you make the same client visit twice a week and can calculate the round-trip distance, that is enough to support the claim.
Logbook Method
The logbook method bases your deduction on what the car actually costs to run, reduced by your personal-use portion. Instead of a flat rate, you tally every running cost for the year and apply the business-use fraction from your logbook.
Keeping a Valid Logbook
If this is your first year using the method, you need to keep a logbook for at least 12 continuous weeks during the income year. That window has to be representative of your travel patterns across the rest of the year. For each journey, record:
- The date of the trip
- Odometer readings at the start and end
- Kilometres driven
- The reason for the journey (a short note like “client site at Richmond” is enough)
The logbook must also capture the car’s odometer reading at the very start and end of the logbook period so the ATO can verify total kilometres.3Australian Taxation Office. Logbook Method
Once completed, a logbook stays valid for five years. You can rely on the same logbook across multiple returns until it expires, unless your driving patterns change significantly. You can also start a new logbook at any time if your work travel goes up or down.3Australian Taxation Office. Logbook Method
Working Out the Deduction
Business-use percentage equals business kilometres in the logbook divided by total kilometres, times 100. If the logbook shows 4,200 business kilometres out of 7,000 total, business use is 60 percent.3Australian Taxation Office. Logbook Method Apply that percentage to the full-year running costs: fuel, oil, tyres, servicing, registration, insurance, and decline in value. If those costs total $9,000, the deduction is $5,400.
The logbook method usually beats the flat rate when you drive well past 5,000 business kilometres or run a vehicle with high costs. The trade-off is the paperwork, since you need receipts or records for every expense category.
Tolls and Parking Are Separate
Tolls and work-related parking fees are not classified as car expenses under the ATO’s rules. That distinction matters because you can claim them on top of whichever method you pick.4Australian Taxation Office. Expenses for a Car You Own or Lease If you use the cents-per-kilometre method and also pay $15 a week in tolls driving to a client site, those tolls are a separate deduction. Many people miss this.
Keep receipts or electronic records for tolls and parking the same way you would for any other work expense. Parking fines and traffic infringement penalties are never deductible, whether or not you were driving for work.
Which Method to Use
You can use whichever method gives you the larger deduction, and you can switch between methods from one year to the next.1Australian Taxation Office. D1 Work-Related Car Expenses 2025 There is no rule that locks you in.
A quick test: multiply your estimated business kilometres by 88 cents. If the result looks low next to what you actually spend running the car, the logbook method is worth the effort. If your business driving is under 5,000 kilometres and your car is cheap to run, the flat rate usually wins on simplicity. One thing to watch when switching: you may need a balancing adjustment for depreciation, so check the ATO’s guidance on depreciating assets before you flip.
Records to Keep
The ATO requires you to keep records for five years after you lodge.5Australian Taxation Office. Overview of Record-Keeping Rules for Business Under the logbook method that means holding fuel receipts, insurance renewals, service invoices, registration notices, and the logbook itself for the full retention period. Each receipt should show the supplier’s name, the date, the amount, and what you paid for.
Under the cents-per-kilometre method you don’t need receipts for running costs, but you do need to be able to explain how you arrived at your business kilometres if asked. A diary, calendar entries, or a consistent formula based on your regular work trips will satisfy that. If you cannot produce valid records during an audit, the deduction can be disallowed and penalties or interest may follow.5Australian Taxation Office. Overview of Record-Keeping Rules for Business
Lodging the Claim in myTax
Work-related car expenses sit under the Deductions section of myTax. The steps:
- On the “Personalise return” screen, tick that you had deductions and select work-related expenses.
- Open the Deductions banner on the “Prepare return” screen.
- Under “Work-related car expenses,” select “Add” for each car and enter the description (registration number or make and model).
- Choose your calculation method. For cents per kilometre, enter your business kilometres. For logbook, enter your running costs and business-use percentage, and myTax will calculate the deduction.
- Save and continue through the rest of the return.
myTax also includes a depreciation tool that will help work out the decline in value of your car if you are using the logbook method.6Australian Taxation Office. myTax 2025 Work-Related Car Expenses If you lodge through a registered tax agent, they enter the same information on your behalf using their own software.
If You File in the United States
These rules apply to Australian returns. On a US federal return the treatment is different, and regular W-2 employees generally cannot deduct unreimbursed mileage at all; the deduction was suspended in 2018 and made permanent by a 2025 amendment removing the sunset date.7Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions If your return is a US one, check the IRS rules for your situation rather than the ATO methods above.