Car expenses: cents per km or logbook?

You drive for work, maybe rideshare, deliveries, house calls or running between jobs. Every time you fill up you wonder how much of this you can claim, and the two methods sound like they were named by someone who never had to choose.

Here's how each one works for a sole trader in 2026-27, and how to tell which gives you more.

Method 1: cents per km

• The rate is 91c per km for 2026-27 only. It's an 89c base rate plus a one-off 2c uplift. For 2025-26 it was 88c.
• You can claim up to 5,000 business km per car, per year. So the most is 5,000 x 91c = $4,550.
• The rate covers all running costs and depreciation, including registration, fuel, servicing and insurance. You can't claim those separately on top.
• You don't need written evidence of exactly how many km you drove, but the ATO may ask how you worked it out, for example from diary records.

Method 2: the logbook

• Keep a logbook for at least 12 continuous weeks that is representative of your travel across the year.
• Record the odometer at the start and end of the period, and for each work trip the date, the reason, the odometer readings and the km.
• Business-use percentage = business km / total km x 100.
• Claim that percentage of your total car costs for the year, including fuel, rego, insurance, servicing and decline in value.
• Keep evidence of your fuel and other car costs.
• Each logbook is valid for five years.

The ATO's own example: Tim drives 11,000 km, of which 6,600 km are for business. That's 60%. With $9,000 of car costs his claim is $5,400.

Which one gives you more?

The cap is the deciding factor for big-km drivers. Past 5,000 business km, cents per km stops growing, while a logbook keeps counting.

Worked example

Nina drives rideshare in Brisbane

Example only. Nina is an example person who drives rideshare on an ABN. Her logbook shows 15,000 business km out of 20,000 total km for the year. Her total car costs, including fuel, rego, insurance, servicing and decline in value, are $12,000, not counting the GST she claims back on her BAS.

The sums, step by step (Australian dollars)

Step	Sum	Result
Cents per km, capped at 5,000 km	5,000 x $0.91	$4,550
Business-use percentage	15,000 / 20,000 x 100	75%
Logbook claim	$12,000 x 75%	$9,000
Difference	$9,000 - $4,550	$4,450 more by logbook

The logbook method gives Nina a claim of $9,000, almost double the cents per km figure.

Rideshare drivers must be registered for GST. Nina claims the GST in the business share of her car costs as credits on her BAS, so her income tax claim uses the costs without that GST.

Worked example

Ash, a mobile hairdresser in Newcastle

Example only. Ash is an example person who drives to clients in a small hatchback. Ash does 3,000 business km out of 12,000 total km and the car costs $7,000 a year to run, including decline in value.

The sums, step by step (Australian dollars)

Step	Sum	Result
Cents per km	3,000 x $0.91	$2,730
Business-use percentage	3,000 / 12,000 x 100	25%
Logbook claim	$7,000 x 25%	$1,750

Cents per km gives Ash $2,730, more than the $1,750 a logbook would, with far less paperwork.

Example only. A cheaper or older car makes cents per km look better, a costly car makes the logbook look better.

A quick way to compare

1. Cents per km: your business km, up to 5,000, times 91c.
2. Logbook: add up the year's car costs, then multiply by your business-use percentage.
3. Use whichever is right for you, and keep the records that method needs.

For the logbook total, the ATO talks about fuel and oil plus all your other car expenses, and decline in value of the car itself. The records page lists receipts for fuel, oil, repairs, servicing and insurance. Only the business share is claimable.

Is your vehicle a car?

For tax, a car is a motor vehicle, including a 4WD, designed to carry less than one tonne and fewer than 9 passengers. A ute or panel van designed to carry one tonne or more, a minivan for 9 or more passengers, and motorbikes are not cars. Both methods here are for cars. Other vehicles are claimed differently, so check the ATO motor vehicle expenses page.

Trips that don't count

The ATO treats travel between home and work as private, unless you run a home-based business and the trip is for business. Private km never count toward your business km or your percentage. If you use the car for both, you need to be able to explain and justify the business percentage.

If you're also an employee

From 2026-27 employees get an automatic standard deduction of up to $1,000 for work-related expenses. Car expenses for your job reduce it dollar for dollar. So if you claim 2,000 work km at 91c, which is $1,820, your standard deduction drops to nil, and you're only $820 ahead of claiming nothing. Car costs for your ABN business are separate and don't reduce the standard deduction.

Records to keep

Keep records of km for business and private use, receipts for fuel, oil, repairs, servicing and insurance, and how you worked out your claim. Keep them for 5 years.

Key numbers

The figures this guide uses, 2026-27 financial year

What	Figure and source
Cents per km rate 2026-27	91c ATO
Base and uplift	89c plus 2c ATO
2025-26 rate	88c ATO
2026-27 only	One year only, commences 1 July 2026 ATO
Cap	5,000 business km per car ATO
Rate covers	Running costs and depreciation ATO

Free official help

• ATO: Cents per kilometre method
  How the method works for sole traders and partnerships.
• ATO: Logbook method
  What your logbook must contain and how to work out your percentage.
• ATO: Deductions for motor vehicle expenses
  What counts as a car and what counts as private travel.
• ATO: Motor vehicle expense records you need to keep
  The receipts and km records to hold onto.

Questions people ask

Get the free pay check sheet

Type in one fortnight's pay and bills and see where it all goes. Works in Excel and Google Sheets.

Email

Email me the sheet

We'll email you the free Where Did My Pay Go? sheet and the Kitchen Table Sums newsletter (about two emails a month with worked examples and new sheets). You'll get a confirm email first. Unsubscribe any time with one click. See our privacy policy.

Keep reading

• Rideshare or food delivery: why drivers need GST from the first dollar

  6 min read

• How much tax should I put aside from my ABN income?

  7 min read

• The new $1,000 standard deduction, explained

  7 min read

• All sole traders and abn guides

Sources

1. Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2026, explanatory statement. https://www.ato.gov.au/law/view/document?LocID=%22ESG%2FESLI202619%22, accessed 2026-10-16.
2. Cents per kilometre method. https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/income-and-deductions-for-business/deductions/deductions-for-motor-vehicle-expenses/cents-per-kilometre-method, accessed 2026-10-16.
3. Logbook method. https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/income-and-deductions-for-business/deductions/deductions-for-motor-vehicle-expenses/logbook-method, accessed 2026-10-16.
4. Deductions for motor vehicle expenses. https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/income-and-deductions-for-business/deductions/deductions-for-motor-vehicle-expenses, accessed 2026-10-16.
5. Motor vehicle expense records you need to keep. https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/income-and-deductions-for-business/deductions/deductions-for-motor-vehicle-expenses/motor-vehicle-expense-records-you-need-to-keep, accessed 2026-10-16.
6. Standard deduction for work-related expenses. https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-deductions/standard-deduction-for-work-related-expenses, accessed 2026-10-16.
7. Income and deductions for ride-sourcing (ATO). https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/sharing-economy-and-tax/ride-sourcing/income-and-deductions-for-ride-sourcing, accessed 2026-10-16.