For 2024–25 and 2025–26, you can claim up to 5,000 work-related kilometres per car using the cents-per-kilometre method at 88 cents per kilometre, giving a maximum deduction of $4,400. For the 2026–27 income year, the rate rises to 91 cents per kilometre from 1 July 2026, lifting the maximum to $4,550.
You’re a tradie finishing a run of site visits, or a small business owner moving between suppliers, clients and jobs. The kilometres add up quickly, but the tax question is less simple than checking your odometer. You need to identify which travel is work-related, choose the method that suits your vehicle use, and keep records that support the claim if the ATO asks questions.
Introduction: How Many Kilometres You Can Claim and Why It Matters
The cents-per-kilometre method gives you a straightforward calculation, but it has a firm ceiling. The ATO’s cents-per-kilometre method allows an individual to claim up to 5,000 work-related kilometres per car per income year. For 2024–25 and 2025–26, you multiply eligible kilometres by 88 cents, so the maximum claim is $4,400 per car.
From 1 July 2026, the rate becomes 91 cents per kilometre for the 2026–27 income year. The same 5,000-kilometre limit then produces a maximum deduction of $4,550 per car, as confirmed in the ATO’s 2026 individual tax return instructions.
What counts as work-related kilometres
The ATO defines work-related kilometres as kilometres travelled in your car in the course of earning assessable income. For example, a sole trader may drive from a workshop to a customer’s premises, then travel to a supplier for materials. An employee may drive between workplaces or attend a client appointment as part of their duties.
Private trips don’t qualify. Ordinary travel between your home and your usual workplace is generally commuting, not deductible work travel. A personal detour, school run or weekend trip also doesn’t become deductible because you use the same car for business.
That distinction matters for a tradie who starts the day at home. The fact that tools are stored in the vehicle, or that the first appointment is at a customer’s property, doesn’t automatically turn every kilometre from home into a work-related journey. The purpose and circumstances of the travel need to support the deduction under ATO rules. The ATO’s legal guidance on work-related car expenses is the right reference point when the trip isn’t obvious.
Why the method choice matters
You have two main methods for a car you own or lease: cents per kilometre and logbook. Cents per kilometre is easier to administer, but the claim stops at the annual cap. The logbook method takes more preparation and recordkeeping, yet it can suit a driver whose business use and actual vehicle costs make the capped method restrictive.
This guide applies the rules to practical tradie and small business situations, including the records that commonly cause trouble. If your kilometres are close to the cap, or your vehicle costs are substantial, a registered tax agent can review the choice before you lodge.
Understanding Your Two ATO Methods for Claiming Car Kilometres
The two methods answer different problems. Cents per kilometre values eligible driving at a fixed ATO rate. The logbook method works from your actual car expenses and calculates the business-use proportion.
| Feature | Cents Per Kilometre | Logbook Method |
|---|---|---|
| Claim basis | Eligible work-related kilometres multiplied by the ATO rate | Business-use percentage applied to eligible car expenses |
| Kilometre limit | 5,000 kilometres per car per income year | No equivalent 5,000-kilometre ceiling under the method |
| Record burden | You must substantiate how you calculated the kilometres and retain supporting records | Continuous 12-week logbook, odometer readings and detailed journey records |
| Best fit | Occasional or moderate work travel where simplicity matters | High business use, high actual running costs or driving beyond the cents-per-kilometre cap |
| Main risk | Reaching the cap and assuming extra kilometres remain deductible under this method | Missing odometer evidence, incomplete trip purposes or overstating business travel |
For an office-based employee who attends occasional meetings, cents per kilometre may be proportionate to the work involved. A tradie who drives regularly between jobs, suppliers and storage locations needs to test the numbers rather than choosing the easier option automatically.
The logbook method doesn’t create a licence to claim every vehicle cost. You still need eligible expenses, a defensible business-use percentage and records that connect the travel to income-producing activity. The ATO’s logbook requirements for car expenses provide a useful checklist before you begin.
A second issue is duplication. You can’t claim the same travel through both methods, and you shouldn’t treat the cents-per-kilometre rate as an additional claim for fuel, servicing or registration. The method determines how you calculate the car deduction.
Practical rule: Choose the method after comparing your expected work kilometres with your actual vehicle costs, not simply because one form looks shorter.
How to Calculate Your Claim Using Cents Per Kilometre
Start with the trips, not the rate. List the journeys that directly relate to earning assessable income, then separate them from commuting and private driving.
A tradie may travel from one customer’s site to another, collect job materials from a supplier, or attend a work-related inspection. Those trips may qualify when the facts support an income-producing purpose. A normal trip from home to a permanent workplace usually doesn’t qualify merely because the driver carries work equipment.
Keep a defensible kilometre record
Tally the eligible work kilometres for each car across the income year. A diary, calendar, spreadsheet or mileage app can help, provided the record identifies the work purpose and shows how you reached the total. You don’t need to send the diary with your return, but you should retain it with your tax records.
Suppose a self-employed electrician records 3,800 eligible work-related kilometres during 2025–26. At the ATO rate of 88 cents per kilometre, the calculation is:
3,800 kilometres × $0.88 = $3,344 deduction
The claim remains below the 5,000-kilometre ceiling, so the calculation uses the full recorded work-related distance. If the same driver recorded 5,000 kilometres, the maximum would be $4,400, calculated as 5,000 × $0.88. The ATO business guidance confirms the fixed rate and annual cap.
Apply the rate for the correct income year
Use the rate that applies to the income year of the travel. For the 2026–27 income year, travel claimed under this method uses 91 cents per kilometre from 1 July 2026, subject to the same cap. At 5,000 kilometres, the maximum becomes $4,550, calculated as 5,000 × $0.91.
For example, a small business employee records 2,400 eligible kilometres during the 2026–27 income year. The deduction would be:
2,400 kilometres × $0.91 = $2,184 deduction
The rate doesn’t remove your recordkeeping responsibility. You still need to show how you identified the journeys, how you calculated the distance, and why the travel was work-related.
The cents-per-kilometre method is simple, but simplicity doesn’t replace evidence. Keep a contemporaneous record of the purpose and distance of each eligible trip.
How to Calculate Your Claim Using the Logbook Method
The logbook method suits taxpayers who need to measure actual business use rather than apply a fixed rate. The ATO requires a continuous 12-week logbook, along with odometer readings at the start and end of the logbook period.
Record each journey during the logbook period, including the kilometres travelled and the business purpose. The logbook must also show the period it covers, total kilometres for that period, and the kilometres for each recorded journey. You must keep odometer records for the income years in which you use the logbook method.
Complete the five-part calculation
The ATO calculation follows a defined sequence:
- Work out the total kilometres travelled during the logbook period.
- Identify the kilometres travelled for work.
- Calculate the work-use percentage by comparing work kilometres with total kilometres.
- Add the eligible car expenses for the income year.
- Apply the work-use percentage to those total expenses to calculate the deductible amount.
Consider a small business owner who uses a vehicle extensively for customer visits, supplier trips and business deliveries. The logbook shows a substantial business-use proportion, and the vehicle’s actual costs include fuel, insurance, registration and servicing. Rather than stopping at the cents-per-kilometre ceiling, the owner can apply the documented business-use percentage to eligible annual costs under the logbook method.
The calculation isn’t “business kilometres multiplied by a rate”. It depends on the relationship between total travel, work travel and actual expenses. The ATO’s logbook method guidance explains the required sequence.
Avoid gaps that undermine the percentage
A blank journey purpose creates uncertainty. “Job” may not explain enough if you can’t identify the customer, site or business activity. Likewise, an opening odometer reading without a corresponding closing reading makes it harder to verify the total distance.
Drivers who operate heavy vehicles should keep their tax records consistent with their broader transport documentation. Guidance on logbooks for truck drivers can help separate operational recordkeeping needs from the specific evidence required for a car tax deduction.
Before relying on the method, use a structured ATO vehicle logbook template and keep copies of odometer evidence. A photo taken at the start and end of the logbook period can support your records, but it doesn’t replace complete journey entries.
Expert view: Logbook usually deserves attention when actual running costs are high or business driving exceeds the cents-per-kilometre ceiling. It only wins if the records support the work-use percentage.
Choosing the Right Method and Avoiding Costly Recordkeeping Mistakes
The right method depends on four practical questions. How much work-related driving does the vehicle do? What does it cost to run? Do you operate more than one car? How much paperwork can you maintain accurately?
Use this decision matrix as a starting point:
| Your situation | Sensible starting point | Why |
|---|---|---|
| Occasional client or work travel | Cents per kilometre | The fixed-rate calculation may be easier to support |
| Work travel approaches the annual cap | Compare both methods | Extra eligible travel can’t be added under cents per kilometre once the cap applies |
| High fuel, insurance, registration or servicing costs | Test the logbook method | The deduction reflects the documented business-use share of actual expenses |
| Regular site-to-site driving | Logbook comparison | Detailed records may capture the business-use pattern more accurately |
| Multiple vehicles | Review each car separately | The cap and records apply to the relevant car and income year |
No method protects a weak travel description. “Business use” written across a calendar doesn’t explain where you went, why the journey earned assessable income, or whether the trip included a private component.
Records that stand up better
For cents per kilometre, retain a clear calculation of work-related kilometres and the supporting diary, calendar or travel record. Your evidence should make the total reproducible rather than relying on memory at tax time.
For a logbook, retain the completed continuous period, start and end odometer readings, total kilometres, journey kilometres and purposes. Continue keeping odometer records for the years you use the logbook method, as the ATO guidance requires.
Common errors include:
- Missing odometer evidence: Record the opening and closing readings and retain supporting photos or written records.
- Incomplete trip purposes: Identify the customer, supplier, site or business task rather than using a vague label.
- Double-counted travel: Reconcile your diary with your calendar and business appointments so one trip doesn’t appear twice.
- Private kilometres included: Remove commuting and personal travel unless a specific rule supports deductibility.
- Assuming the cap applies to every method: The 5,000-kilometre ceiling applies to cents per kilometre, while the logbook method uses the work-use proportion of eligible costs.
The ATO’s vehicle expense deduction guidance can help you organise the initial review. EndureGo Tax can also review vehicle records as part of its tax and ATO audit assistance work, but the supporting evidence still needs to reflect what happened.
Frequently Asked Questions and Next Steps with EndureGo Tax
Can I claim kilometres for multiple cars?
You can assess each car separately, but you must keep the kilometres and supporting records tied to the relevant vehicle. Under the cents-per-kilometre method, the 5,000-kilometre limit applies per car per income year, not as one combined pool for every vehicle. The method still requires eligible work-related travel rather than private or ordinary commuting.
What happens if I drive more than 5,000 work-related kilometres?
You can’t claim more than 5,000 kilometres per car under the cents-per-kilometre method. If your work driving exceeds that ceiling, compare the logbook method, particularly where the vehicle has meaningful actual costs, and your records can establish the business-use percentage.
Do I need receipts for the cents-per-kilometre method?
The fixed rate is designed to cover the car expenses represented by the method, so you don’t calculate separate fuel or servicing claims on top of it. You still need records showing how you worked out the work-related kilometres and evidence supporting the work purpose of the journeys.
How does the 2026 rate change affect my return?
For the 2026–27 income year, the ATO rate is 91 cents per kilometre from 1 July 2026, with the 5,000-kilometre cap producing a maximum deduction of $4,550. The 2025–26 rate remains 88 cents per kilometre, with a maximum of $4,400 under the same method and cap. Apply the rate to the income year and travel period concerned, rather than using the newer figure retrospectively.
The answer to “how many kilometers can I claim on tax” depends on both the method and the quality of your records. Cents per kilometre gives a capped, fixed-rate calculation. A logbook requires more work, but it may better reflect high business use and actual vehicle costs.
EndureGo Tax advises individuals, tradies and small businesses on cents-per-kilometre claims, logbook calculations, vehicle deductions and ATO recordkeeping. Visit EndureGo Tax to arrange CPA-qualified registered tax agent support in Ashfield, Belrose or Adelaide, including assistance with tax returns and ATO audit correspondence.
