TL;DR – What You Need to Know
- There are two methods to claim motor vehicle expenses: Cents per Kilometre and Logbook.
- Cents per Kilometre is simpler but capped at 5,000 km (currently 88 cents per km).
- Logbook usually gives a higher deduction if you drive a lot for work, but requires a 12-week logbook (valid for 5 years).
- Only work-related trips count — your normal commute from home to work generally does not.
- Keep good records — either a simple diary for cents per km, or a proper logbook + receipts for the logbook method.
- Our checklist will help you choose the best method for your situation.
The two methods
Method 1 — Cents per Kilometre
You track all the kilometres you've travelled for work during the year and multiply them by the ATO's approved rate. The current rate is 88 cents per kilometre (note: the ATO reviews this rate annually
The cap is 5,000 kilometres. So the maximum deduction under this method is 5,000 × 88 cents = $4,400.
You don't need a formal logbook, but you do need written evidence — diary entries noting the date, destination and reason for each trip. "Driving for work" isn't enough detail. The ATO wants specifics.
Good for: people who drive for work occasionally and don't clock up huge km's. Simple and low-admin.
Method 2 — Logbook
Keep a logbook for 12 consecutive weeks to establish what percentage of your total driving is for work. Once you have that percentage, you can apply it to all your actual vehicle costs for the year.
Your logbook needs to record every trip during those 12 weeks — start and end odometer reading, kilometres travelled, destination, and whether the trip was private or business. It sounds like a lot, but once it's done, it's valid for five years. You don't need to redo it every year unless your work use changes significantly.
With the work-use percentage established, you can claim that percentage of:
- Registration
- Insurance and green slip
- Fuel
- Servicing, repairs and tyres
- Car wash (yes, genuinely)
- Roadside assistance
- Loan interest (if you have a car loan)
- Lease costs (if leasing)
- Depreciation on the vehicle
You'll need receipts for all of these. Apps like Drivers Note make logbook keeping much easier, or you can use our Google Sheets logbook template. Old-school paper logbooks are available at Officeworks if you prefer.
Good for: anyone doing a significant amount of work-related travel — typically if you're exceeding 5,000km, the logbook method will give you a higher deduction.
Which method is better?
It depends on how much you drive for work.
If you're doing fewer than 5,000km a year for work, the cents per km method is usually simpler and adequate.
If you're on the road a lot — visiting clients, travelling between sites, carrying tools and equipment — the logbook method almost always delivers a larger deduction. The 12-week setup is worth it.
What trips actually count as work-related?
This is where people sometimes get it wrong. The following are deductible:
- Travelling between two separate workplaces
- Carrying bulky tools or equipment that you genuinely can't store at work
- Travelling from work to visit a client or supplier
- Travelling to a conference, training or industry event
- Running work errands — picking up supplies, going to the post office or bank for work
The following are not deductible:
- Your normal trip from home to work and back — this is a private expense, even if it feels like work travel
- Trips your employer has already reimbursed you for
The tool-carrying exception is worth noting. If your employer offers secure storage for your tools at work but you choose to bring them home, that doesn't make the commute deductible. But if your job genuinely requires you to carry bulky equipment from home to job sites each day because there's nowhere safe to store it, those trips can qualify.
Example: Sales role with lots of client visits
You start at the office each day, then spend the day visiting clients across town. You clock up well over 5,000km in client visits during the year.
In this case, a logbook is worth setting up. Your work percentage will likely be high, and you'll be able to claim the relevant portion of all your vehicle running costs — not just a per-km rate capped at 5,000km.
Example: Tradie carrying tools
You're a plumber and you drive from home to different job sites each day. Your tools stay in the van because the van is your mobile workshop.
Depending on the nature of the work, these trips may be deductible. Talk to us about the specifics — the rules around home-to-work travel and tool carrying can be nuanced.
Ready for tax time?
Head to the Growthwise 2026 Tax Return Checklist when you're ready to submit. We'll ask you about your vehicle use and guide you through the right method.
For everything else you can claim on your return, check out What Expenses Can I Claim as an Employee?
