Car Expense Tax Deduction Calculator
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How Car Expense Deductions Work
Cents per kilometre method: You can claim a flat rate of 88 cents per kilometre (FY2024-25 onwards) for work-related car travel, up to a maximum of 5,000 km per year. No receipts or logbook needed — just a reasonable basis for your estimate.
Logbook method: You keep a logbook for at least 12 continuous weeks to determine the work-related percentage of your car use. You can then claim that percentage of all actual car running expenses including fuel, registration, insurance, servicing, depreciation, and loan interest.
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Frequently Asked Questions
What is the cents per kilometre method?
The cents per kilometre method allows Australian taxpayers to claim a flat rate of 88 cents for every work-related kilometre driven (rate effective from FY2024-25 onwards, set annually by the ATO). The maximum claim is 5,000 km per year, capping the deduction at $4,400 regardless of actual expenses. You do not need written evidence of each trip, but you must be able to demonstrate a reasonable basis for calculating your work kilometres — such as regular client visits, travel between workplaces, or driving to conferences. This method cannot be used for trips between home and your regular workplace (this is private travel). The rate is updated annually by legislative determination. Source: ATO — Car expenses (ato.gov.au).
What is the logbook method?
The logbook method requires keeping a logbook for a minimum continuous period of 12 weeks that records every trip to establish your work-related percentage of total car use. Once established, you claim that percentage of ALL car running expenses for the full financial year: fuel and oil, registration, insurance, servicing and repairs, tyres, depreciation (using the ATO effective-life rate for the vehicle), and interest on a car loan. For example, if your logbook shows 65% work use and your annual car costs total $12,000, your deduction is $7,800. There is no kilometre cap. A valid logbook remains effective for 5 years unless your driving patterns change significantly (e.g. you change jobs or work locations). Source: ATO — Car expenses logbook method (ato.gov.au).
Which method gives a higher deduction?
The logbook method typically gives a higher deduction when: (1) you drive more than 5,000 work kilometres per year (since cents/km caps at $4,400), (2) your total car running costs exceed approximately $7,500/year, or (3) your work-use percentage is above 50%. For example, a car costing $10,000/year in total expenses with 70% work use gives a $7,000 logbook deduction — far exceeding the $4,400 cents/km maximum. Conversely, cents per kilometre is often better for drivers with low annual costs (e.g. a fuel-efficient car) or those who drive under 5,000 work km — it's simpler and requires less record-keeping. As a quick test: if your total car costs × work-use % exceeds $4,400, the logbook method wins.
How do I keep a valid logbook?
A valid ATO logbook must cover at least 12 continuous weeks and record for every trip: the date, odometer reading at start and end, total kilometres travelled, purpose of the trip (work or private), and the destination. At the end of the 12-week period, calculate your work-use percentage (total work km ÷ total km × 100). This percentage applies for up to 5 years. Choose a representative 12-week period — avoid annual leave or unusual travel patterns that would skew results. Digital logbook apps (approved by the ATO) are acceptable and automatically calculate your percentage. You must also keep receipts for all car expenses you intend to claim under this method. If your circumstances change significantly (new job, new workplace, new vehicle), you need a new 12-week logbook. Source: ATO — Keeping your car records (ato.gov.au).
What if I drive more than 5,000 work kilometres?
If you regularly drive more than 5,000 work kilometres per year, the logbook method will almost certainly give a larger deduction. Under cents per km, your claim is capped at 5,000 km × $0.88 = $4,400 regardless of how many actual work kilometres you drive. Under the logbook method, there is no kilometre cap — you claim your work-use percentage of actual total expenses, which scales with your driving. For example, if you drive 15,000 work km out of 20,000 total (75% work use) with $12,000 in annual expenses, your logbook deduction is $9,000 — more than double the cents/km maximum. The only additional requirement is maintaining a valid 12-week logbook plus receipts for expenses. Source: ATO (ato.gov.au).