ATO Cents Per Kilometre Rate 2026–27: How to Claim Vehicle Deductions

Current ATO Cents Per Km Rate for 2026–27

The ATO cents per km rate for the 2026–27 income year (1 July 2026 to 30 June 2027) is 91 cents per kilometre.

That is a 3 cent increase on the 88 cents that applied in 2025–26. The 91 cents is made up of an 89 cent base rate plus a one-off 2 cent uplift for 2026–27 only — so do not assume it carries into 2027–28.

This single flat rate encompasses all vehicle running costs. You don't need to calculate individual expenses for fuel, registration, insurance, depreciation, or maintenance. The ATO consolidates everything into that 91 cents.

Want the figure for your own kilometres? Use our cents per km calculator — it applies the cap and shows what going over it costs you.

ATO Cents Per Km Rates: Recent Years

What the Rate Covers

That 91 cents per kilometre accounts for:

• Fuel and oil
• Registration and insurance
• Servicing, repairs, and tyres
• Depreciation

Because the rate is all-inclusive, you cannot claim any of these expenses separately if you use the cents per km method. It's one or the other.

How the Cents Per Km Method Works

The cents per km method is the simplest way to claim motor vehicle deductions. You multiply your business kilometres by the ATO rate. That's it.

But there's one important rule: you can only claim a maximum of 5,000 business kilometres per car per year.

Even if you drive 15,000 km for work, the cents per km method caps your claim at 5,000 km. This is the biggest limitation of this approach, and it's why high-kilometre workers often switch to the logbook method.

Cents Per Km: A Worked Example

Meet Tom, a sole trader electrician in Melbourne. He estimates he drove 4,200 business kilometres during the 2026–27 financial year visiting job sites across the suburbs.

Here's how his claim works:

Tom's Vehicle Deduction

• Business kilometres: 4,200 km
• ATO rate: 91 cents ($0.91)
• Calculation: 4,200 × $0.91
• Total claim: $3,822

That's $3,822 Tom can deduct from his taxable income. On the 30% marginal rate plus the 2% Medicare levy, that puts roughly $1,223 back in his pocket at tax time.

Now, if Tom had driven 6,500 business kilometres, his claim would still be capped:

• Business kilometres driven: 6,500 km
• Maximum claimable: 5,000 km
• Calculation: 5,000 × $0.91
• Maximum claim: $4,550

The 5,000 km cap means $4,550 is the most anyone can claim per car using the cents per km method for 2026–27. Tom's extra 1,500 km — worth $1,365 in deductions — simply doesn't count under this method.

What Counts as Business Travel

You can claim kilometres for:

• Driving between two separate workplaces
• Travelling to meet clients or attend work sites
• Running work errands (picking up supplies, dropping off equipment)
• Travelling to training courses related to your work
• Driving to the bank or post office for business purposes

What Doesn't Count

Your daily commute doesn't count. Driving from home to your regular workplace and back is personal travel, not business travel. The ATO is strict on this point.

Other trips you cannot claim:

• Personal errands during a work trip
• Driving to social events, even if colleagues attend
• Travel that's primarily private in nature

The exception: if your home is your principal place of business, then trips from home to client sites typically qualify as business travel.

Logbook Method: The Alternative

If you drive more than 5,000 business kilometres per year, the logbook method could save you significantly more.

Instead of a flat rate, the logbook method lets you claim the actual business-use percentage of all your vehicle expenses. There's no kilometre cap.

How the Logbook Method Works

1. Keep a logbook for 12 continuous weeks. Record every trip — the date, odometer readings, kilometres driven, and whether it was business or personal.
2. Calculate your business-use percentage. If you drove 3,000 km total during your logbook period and 1,800 km was for business, your business-use percentage is 60%.
3. Apply that percentage to all vehicle expenses for the year. If your total car costs were $12,000, you'd claim $7,200 (60% of $12,000).

Your logbook stays valid for five years, as long as your circumstances don't change significantly. If you change jobs, move house, or buy a different car, you'll need a new 12-week logbook.

What Expenses You Can Claim

With the logbook method, you claim your business-use percentage of:

• Fuel and oil
• Registration
• Insurance
• Loan interest (on the car purchase)
• Depreciation
• Repairs, servicing, and maintenance
• Tyres
• Car wash costs
• Roadside assist memberships
• Tolls and parking (business-related)

You'll need receipts for all of these. This is where keeping organised records makes a real difference.

When the Logbook Method Saves You More

The logbook method almost always wins when:

• You drive more than 5,000 business km per year
• Your vehicle has high running costs (fuel, insurance, repairs)
• Your business-use percentage is above 50%
• You have a newer or more expensive car with higher depreciation

For someone driving 20,000 business km a year with $15,000 in annual car costs and a 70% business-use percentage, the logbook method would yield a $10,500 deduction. The cents per km method would cap them at $4,550.

Cents Per Km vs Logbook Method

The quick rule: if your business driving is under 5,000 km and you want simplicity, use cents per km. If you drive more than 5,000 km for work or your vehicle costs are high, the logbook method will likely put more money back in your pocket. Our calculator shows exactly what the capped kilometres would have been worth, which is the number to weigh against the effort.

You can switch between methods each financial year. You're not locked in.

Who Can Claim Vehicle Deductions

Several types of workers can claim ATO vehicle deductions.

Sole Traders and Self-Employed

If you run your own business, you can claim for any driving directly related to earning your business income. This includes visiting clients, attending industry events, and purchasing supplies.

Employees With Work-Related Travel

Employees can claim vehicle expenses when they drive their personal car for work purposes. This doesn't include your regular commute, but it does cover things like:

• Driving between work locations
• Visiting clients on behalf of your employer
• Carrying bulky tools that can't be stored at work
• Attending work conferences or training

Your employer needs to not have reimbursed you for these trips. If they pay you a per-km allowance, you still need to declare it as income and can then claim the deduction.

Rideshare and Delivery Drivers

If you drive for Uber, DiDi, Menulog, or similar platforms, your vehicle is central to your income. The logbook method is almost always the better choice for rideshare and delivery drivers because of the high kilometres involved.

One thing to note for rideshare drivers: you must register for GST regardless of your income level. The normal $75,000 GST threshold doesn't apply to taxi and rideshare services — the threshold is $0.

Record Keeping Requirements

The ATO expects different levels of documentation depending on which method you choose.

For the Cents Per Km Method

You need a reasonable estimate of your business kilometres. The ATO doesn't require a logbook for this method, but they can ask you to explain how you calculated your estimate.

Good approaches include:

• Noting regular trips and their distances
• Using Google Maps to verify common route distances
• Keeping a simple diary of business trips
• Using a mileage tracking app to log trips automatically

If the ATO audits your claim, "I just guessed" won't hold up. Have a reasonable basis for your estimate, even if it's informal.

For the Logbook Method

Record keeping for the logbook method is more involved. You need:

1. A 12-week logbook recording every trip (business and personal) with dates, odometer readings, kilometres, and purpose
2. Receipts for all vehicle expenses throughout the year (fuel, servicing, insurance, registration, and so on)
3. Odometer readings at the start and end of the income year

This is where most people trip up. Keeping a year's worth of fuel receipts, service invoices, and insurance documents organised can be painful, especially if you're busy running a business.

How Long to Keep Records

The ATO requires you to keep records for five years from the date you lodge your tax return. Digital copies are fine, as long as they're legible and complete. See our guide to ATO record keeping requirements for the detail.

Frequently Asked Questions

What is the ATO cents per km rate for 2026–27?

The ATO cents per km rate for the 2026–27 income year is 91 cents per kilometre, up from 88 cents in 2025–26. This rate applies from 1 July 2026 to 30 June 2027. It covers all vehicle running costs including fuel, insurance, registration, depreciation, and maintenance. The 91 cents is an 89 cent base rate plus a one-off 2 cent uplift for this year only.

Can I claim more than 5,000 km using the cents per km method?

No. The cents per km method has a strict cap of 5,000 business kilometres per car per year. For 2026–27, this means the maximum claim is $4,550 (5,000 × $0.91). If you regularly drive more than 5,000 km for work, consider the logbook method instead, which has no kilometre limit.

Do I need receipts for the cents per km method?

You don't need fuel or maintenance receipts for the cents per km method. However, you do need to be able to show how you calculated your business kilometres. Keep a record of your regular business trips, their distances, and frequency. The ATO may ask you to justify your estimate during an audit.

Can I switch between the cents per km and logbook methods?

Yes, you can choose a different method each financial year. You're not locked into one approach. Many people use cents per km in years with low business driving and switch to the logbook method when their driving increases.

Is the daily commute from home to work claimable?

No. Travel between your home and your regular workplace is considered personal travel and is not deductible. The main exception is when your home is your base of operations for your business. In that case, trips from home to client sites or other work locations typically count as business travel.

How often do I need to redo my logbook?

Your logbook is valid for five years from the end of the income year you started it, as long as your work circumstances haven't changed significantly. If you change jobs, your work locations change, or you buy a different car, you'll need to complete a new 12-week logbook.

Does each car get its own 5,000 km cap?

Yes. The cap applies per car, so if you use two vehicles for business you can claim up to 5,000 km on each. You still need a reasonable basis for the kilometres claimed on both.

Claim Every Kilometre You're Owed

Whether you use the cents per km method or the logbook method, the key is picking the right approach for your situation and keeping records that back up your claim.

For most workers who drive under 5,000 business km per year, the cents per km method at 91 cents is simple and effective. If you're a tradie, sales rep, or rideshare driver clocking serious kilometres, the logbook method will almost certainly save you more.

Either way, tracking your trips and expenses throughout the year beats scrambling to reconstruct everything in July.

Rates and thresholds verified against ATO guidance as of August 2026. The 2026–27 rate includes a one-off uplift that does not automatically carry forward — check current ATO guidance before relying on any figure here, and speak to your accountant about your own circumstances.