Who can claim
This deduction is available to individuals and companies.
- The expense is incurred in carrying on an existing income-producing business.
- Any private, capital or non-income-producing component is reasonably apportioned or excluded.
- The car is used for business travel and the method available to the taxpayer and vehicle is applied correctly.
- An individual sole trader, or a partnership with at least one individual partner, may use cents per kilometre or the logbook method for an eligible car.
- A company or trust uses actual costs for its vehicles and applies any private-use fringe benefits tax treatment.
What you cannot claim
- Do not include private drawings or personal expenses.
- Do not treat a capital asset, improvement or acquisition cost as an ordinary operating expense.
- Private travel and ordinary employee commuting are excluded.
- Companies and trusts cannot use the cents per kilometre method.
- Do not use cents per kilometre for a motorcycle or another vehicle that is not a car under the tax rules.
- Enter each cost once: cents per kilometre already covers all running costs, while a logbook or company actual-cost claim must not duplicate lease payments, insurance, repairs, interest or decline in value recorded elsewhere.
How the amount is worked out
For 2025-26, an eligible individual or partnership cents-per-kilometre claim is business kilometres × 88 cents, capped at 5,000 business kilometres per car; for 2026-27 the rate is 91 cents with the same cap, and the rate covers all running costs. Alternatively, use the logbook method. A company or trust claims the business portion of actual vehicle costs, presents lease, interest and decline-in-value components at their applicable labels, and accounts for private employee use under the fringe benefits tax rules.
Records the ATO expects
- Odometer and business-kilometre records
- 12-week logbook where used
- Running-cost and ownership invoices for actual costs
- Business-use calculation
- Fringe benefits tax records where relevant
Where this rule comes from
Primary source: Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2026 (91 cents/km for 2026-27 — F2026L00785, registered 23 June 2026). Reviewed 30 July 2026. Covers the 2025-26 and 2026-27 income years.
Supporting sources:
- Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2024 (88 cents/km from 2024-25 — F2024L00697)
- ATO cents per kilometre rate (Published 30 June 2026)
- ATO deductions for motor vehicle expenses (ATO business motor vehicle methods and vehicle definitions)
- Income Tax Assessment Act 1997 section 40-25 (Section 40-25)