The cents per kilometre method lets you claim a set rate for every work-related kilometre you drive, up to 5,000 kilometres per year. No logbook or fuel receipts are required — just a credible record of your work-related trips. For FY2025–26, the rate is 88 cents per kilometre.
The Rate — FY2025–26
| Financial year | Rate per km |
|---|---|
| FY2025–26 | 88c/km |
| FY2024–25 | 88c/km |
| FY2023–24 | 85c/km |
| FY2022–23 | 78c/km |
The ATO updates the rate periodically. Always use the rate for the year in which the kilometres were driven.
How to Calculate Your Claim
Formula: Work-related kilometres × $0.88
| Annual work km | Deduction (at 88c) |
|---|---|
| 1,000 km | $880 |
| 2,500 km | $2,200 |
| 5,000 km | $4,400 (maximum) |
The maximum annual deduction under this method is $4,400 (5,000 km × $0.88).
What the Rate Covers
The 88c/km rate is an all-inclusive rate — it covers:
- ✅ Fuel
- ✅ Oil
- ✅ Servicing and repairs
- ✅ Tyres
- ✅ Registration
- ✅ Insurance and CTP
- ✅ Decline in value (depreciation)
You cannot claim any of these costs separately if you are using the cents-per-km method. The rate is the entire vehicle deduction.
You can still separately claim: Parking fees and tolls incurred during deductible work trips (these are not vehicle running costs and are outside the cents-per-km rate).
Record-Keeping Requirements
You do not need a logbook under this method — but you must be able to show your claim is reasonable. Good practice:
- Keep a note (diary, calendar entry, spreadsheet) of each work trip including date, destination, and purpose
- Note the total work kilometres at the end of the year
The ATO does not require a formal logbook for this method but may ask for evidence that you drove the number of kilometres you claimed.
When Cents Per Km Is Better Than Logbook
The cents-per-km method is simpler and often better when:
- Your work kilometres are below approximately 3,000–4,000 per year
- Your actual vehicle running costs are low (older car, small fuel costs)
- You want to avoid 12 weeks of logbook record-keeping
Example comparison:
- Work kilometres: 3,500
- Cents/km claim: 3,500 × $0.88 = $3,080
- Logbook method (if total costs = $10,000, 40% work use): $4,000
In this case, the logbook gives a higher result — but the cents/km method may still be preferred for simplicity if the difference is small.
Eligible Vehicles
The cents per kilometre method applies to cars — motor vehicles (excluding motorcycles) designed to carry fewer than 9 passengers with a load capacity under 1 tonne. For motorcycles, commercial vehicles, and utes with a payload of 1 tonne or more, different rules apply.
Frequently Asked Questions
Can I claim more than 5,000km if I drove more for work? No. The 5,000km cap is absolute under this method. If your work travel exceeds 5,000km, the logbook method has no cap and will typically give a higher deduction.
Do I need a receipt for fuel? No. The cents-per-km rate is an all-inclusive rate that replaces actual expense tracking. No fuel receipts, service receipts, or insurance records are needed.
Can I use the cents-per-km method for a car I lease or finance? Yes. The method applies to any car you use for work, whether owned outright, on a car loan, or leased personally.
Can I claim more than one car under this method? Yes — if you use two personal vehicles for separate work purposes, you can apply the method to each car. The 5,000km cap applies per car.
This article provides general tax information. For advice tailored to your situation, speak with a registered tax agent. Find one through the Tax Practitioners Board register.