Track business trips and calculate vehicle tax deductions using the ATO cents per kilometre method
Calculate your vehicle tax deductions at $0.88 per kilometre (2025-26 FY). Automatic ATO-compliant logbook tracking for contractors, sole traders, and employees. Simple, accurate, free.
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The Australian Taxation Office (ATO) allows you to claim a tax deduction for business-related car travel using the cents per kilometre method. For the 2025-26 financial year, the rate is $0.88 per kilometre.
This method is ideal for landlords visiting rental properties, contractors meeting clients, and small business owners making work-related trips. You can claim up to 5,000 kilometres per vehicle without maintaining a log book.
While you don't need a log book for claims under 5,000 km, you should keep evidence of:
Pro tip: ReceiptClaimer's trip tracker automatically records all this information and calculates your deductions in real-time, saving you hours during tax time.
The cents per kilometre method is the simplest way to claim car expenses for work-related travel. The ATO sets a fixed rate that covers all car running costs including fuel, maintenance, insurance, and depreciation.
This rate covers ALL car running costs — no need to track individual expenses
Special case: If you carry bulky equipment (tools, instruments) that can't be stored at work, you may claim home-to-work travel. Keep evidence of the equipment and why it can't be left at work.
The ATO reviews this rate annually to account for changes in vehicle running costs. Here's how the rate has evolved:
| Financial Year | Rate | Max Deduction (5,000 km) |
|---|---|---|
| 2022-23 | 78¢ per km | $3,900 |
| 2023-24 | 85¢ per km | $4,250 |
| 2024-25 | 88¢ per km | $4,400 |
| 2025-26 (Current) | 88¢ per km | $4,400 |
Note: The 2025-26 rate of 88¢ per km is the same as 2024-25. The ATO reviews this rate annually based on vehicle running costs.
Sarah is a contractor who visits client sites 2 times per week. Each round trip is 32km (office → client → office).
Why cents per km works: Under 5,000 km limit, no logbook required, simple record keeping
Mark is a sales rep who drives to client meetings 4 days per week. Average round trip is 24km per meeting.
Perfect fit: Just under 5,000 km cap, maximizes cents per km benefit
Lisa is a part-time consultant who meets clients once per week. Round trip is 30km per meeting.
Simple & effective: Low km count makes cents per km the easiest choice
Emma drives to client showings and property appraisals daily, averaging 160km per week.
💡 Consider logbook method: Emma's 3,000 km over the cap. With actual car costs of $12,000/year and 70% business use, logbook deduction = $8,400 (vs $4,400 cents per km). She'd gain $4,000 extra.
The ATO allows two methods for claiming car expenses. Here's how they compare:
| Feature | Cents Per KM | Logbook Method |
|---|---|---|
| Rate | 88¢/km (2025-26) | Actual costs × business % |
| Annual Limit | 5,000 km/year | No limit |
| Logbook required? | No | Yes (12 weeks) |
| Receipts needed? | No | Yes (all car expenses) |
| Simplicity | ⭐⭐⭐⭐⭐ Very easy | ⭐⭐ Complex |
| Best for | <5,000 km/year | >5,000 km/year |
| Max deduction | $4,400 (5,000 × $0.88) | Unlimited (based on actual costs) |
| Record keeping | Trip diary only | 12-week logbook + all receipts |
While the cents per km method doesn't require a full car logbook, understanding ATO logbook requirements helps you decide which method suits your situation best.
A car logbook is a detailed 12-week record of ALL your vehicle use (business and private). The ATO uses this to calculate your business-use percentage, which determines how much of your actual car expenses you can claim.
Key difference: Cents per km = simple trip diary. Car logbook = comprehensive 12-week tracking of ALL trips.
For EVERY trip during the 12-week period, you must record:
NO logbook needed if: You use the cents per km method (under 5,000 km/year). Just keep simple trip records.
YES logbook required if: You use the logbook method for actual car expenses (over 5,000 km or high costs).
Most contractors, sole traders, and part-time workers don't need a full logbook. The cents per km method is simpler and sufficient.
Even though the cents per km method doesn't require a full logbook, you still need evidence to support your claim. Here's what the ATO expects:
Pro tip: Use ReceiptClaimer's mileage tracking feature to automatically log trips with GPS, photos, and notes. Export a complete year-end summary for your tax return.
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