Car and travel claims: 88 cents a kilometre, and the trips you can’t claim

Aug 10, 2026

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Car claims are one of the most commonly made — and most commonly overstated — work-related deductions. Two rates matter right now:

2025–26: 88 cents per kilometre (the year most people are lodging for now)
2026–27: 91 cents per kilometre from 1 July 2026 — an 89 cent base rate plus a one-off 2 cent uplift

How the cents per kilometre method works

You multiply your work-related kilometres by the rate. The cap is 5,000 kilometres per car, per year. For 2025–26 that means a maximum claim of $4,400 per car.

The rate is designed to cover everything: fuel, servicing, tyres, registration, insurance and depreciation. You cannot claim depreciation or running costs separately on top of it.

You do not need a formal logbook for this method — but you do need to be able to show how you worked out the kilometres. A diary, calendar entries or a record of your regular work trips will do. A round number like “5,000 km” with nothing behind it is a red flag, and the ATO says so openly.

When you should use a logbook instead

If your work travel exceeds 5,000 km, the cents per kilometre method caps you out. To claim the full amount you must use the logbook method for the entire claim.

The logbook method works out your business-use percentage and applies it to your actual costs, including depreciation. It requires:

A logbook covering a continuous 12-week period that represents your typical travel
Odometer readings at the start and end of the period, and at the start and end of each income year
Receipts for your actual running costs, or reasonable estimates for fuel and oil based on odometer readings

A logbook stays valid for five years, so it is twelve weeks of effort for five years of a higher claim. For anyone doing serious work kilometres it is almost always worth it.

The trips you cannot claim

This is where most incorrect claims originate. Ordinary travel between home and work is private, even if:

You work outside normal business hours
There is no public transport on your route
You do minor work-related tasks on the way, like collecting mail
You are on call

Travel that generally is claimable includes trips between two separate workplaces, travel to a client or alternative work site, and home-to-work travel where you carry bulky equipment that your employer requires and there is no secure storage at work.

Who can use which method

The cents per kilometre method is available to individuals, sole traders, and partnerships where at least one partner is an individual. Companies and trusts cannot use it — they must claim actual expenses, and if a vehicle is provided to an employee or director, fringe benefits tax needs to be considered.

A quick comparison

Say you travelled 4,000 work kilometres in 2025–26 in a car with $9,000 of annual running costs and depreciation, and a 45% business-use percentage.

Cents per kilometre: 4,000 × $0.88 = $3,520
Logbook: $9,000 × 45% = $4,050

The logbook wins here — and the gap widens with newer, more expensive vehicles where depreciation is high. It is worth running both.

Need a hand with this?

We work out both methods and use the one that gives you the larger legitimate claim. If you drive for work regularly and have never kept a logbook, starting one now sets up the next five years.

Book a consultation

Call 0410 250 400

Sources

This article is general information only and does not take your personal circumstances into account. Rates and thresholds are current for the 2025–26 income year unless stated otherwise. Speak to us before acting on anything you read here.