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

Yes. You can choose whichever method gives you the bigger deduction each income year, and you can switch from one to the other in a later year. Many sole traders keep a logbook anyway so they always have the option to compare, because you can't apply the logbook method retrospectively without the records to back it up.

How long is a logbook valid?

A logbook must cover a minimum continuous 12-week period and is generally valid for five years, as long as your circumstances and business-use pattern don't change materially. If your work travel changes significantly — you move premises or take on very different work — you should start a fresh logbook. You still need to keep receipts for your actual car costs in each year you use the method.

Do I need receipts for the cents per km method?

No, you don't need to keep fuel or servicing receipts for the cents per km method, but you do need to be able to show how you worked out your business kilometres. A diary of work trips, or a record of a regular travel pattern, is usually enough. Keep those records for five years, like any other tax record.

Car Expenses for Business: Cents per KM vs Logbook (ATO)

Q: What is the cents per km rate for 2025-26?

For the 2025-26 income year the ATO's cents per km rate is 88 cents per business kilometre, capped at 5,000 business kilometres per car. That single rate is meant to cover all your running costs — fuel, servicing, registration, insurance and depreciation — so you can't claim those separately on top. The ATO reviews the rate each year, so confirm the current figure at ato.gov.au before you lodge.

Last updated 4 July 2026

If you use your car for work, the ATO gives you two ways to claim the running costs: the cents per km method and the logbook method. Picking the right one can be the difference between a quick, tidy claim and a bigger deduction that's worth a little extra paperwork. This guide walks through how each method works, the current rate and cap, who each one suits, and exactly what records you need so your claim holds up if the ATO ever asks.

First, a quick note on what counts as a "car". Both methods apply to cars — vehicles designed to carry less than one tonne and fewer than nine passengers. If you drive a larger ute or van over one tonne, different rules apply and you generally claim actual costs.

The two methods at a glance

	Cents per km	Logbook
Best for	Lower business km, simple records	High business km or high running costs
What you claim	Set rate × business km	Business-use % × actual costs
Cap	5,000 business km per car, per year	No cap
Records needed	How you worked out your km	12-week logbook + cost receipts
Basis	88c per km (2025-26)	Your real, receipted costs

Method 1: Cents per kilometre

This is the simple one. You claim a set rate for every business kilometre you drive, up to a maximum of 5,000 business kilometres per car each year.

For the 2025-26 income year the rate is 88 cents per km — but the ATO sets this each year, so always confirm the current figure at ato.gov.au before you lodge. At 88c, the most you can claim under this method is 5,000 × $0.88 = $4,400 per car.

The rate is designed to cover all your running costs — fuel, servicing, registration, insurance and the car's depreciation. That means you can't claim any of those on top; the single per-km figure already includes them.

You don't need to keep fuel or repair receipts to use this method. What you do need is a reasonable way to show how you arrived at your business kilometres — a diary of work trips, or evidence of a regular pattern of travel. It suits sole traders who drive modest business distances and want the least fuss.

Method 2: The logbook method

The logbook method lets you claim the business-use percentage of your actual car expenses, with no kilometre cap. It's more work, but for people who drive a lot for their business it usually produces a larger deduction.

Here's how it works:

Keep a logbook for a minimum continuous 12-week period, recording each journey's date, start and end odometer readings, kilometres travelled and purpose.
Work out your business-use percentage — business kilometres divided by total kilometres over that period.
Apply that percentage to your actual costs for the year: fuel and oil, servicing and repairs, registration, insurance, interest or lease payments, and the decline in value (depreciation).

A logbook is generally valid for five years unless your driving pattern changes, so you only do the 12-week exercise occasionally. You also need odometer readings at the start and end of each income year, and you must keep receipts for your car costs — fuel and oil can be estimated from odometer readings, but the rest need written evidence.

This is where keeping receipts as you go really pays off. Snapping each fuel, service and insurance receipt so nothing slips through the cracks turns a stressful end-of-year reconstruction into a five-minute export. An app like Snapceipt reads the merchant, total and GST off each receipt and keeps the record BAS-ready, which is handy given you'll also be tracking GST across your other business expenses.

Which method suits you?

A quick worked example makes the choice clear. Say you drive 4,000 business kilometres in a year:

Cents per km: 4,000 × $0.88 = $3,520.
Logbook: if your total car costs are $12,000 and your logbook shows 40% business use, you claim 40% × $12,000 = $4,800.

In that case the logbook wins comfortably. But if your business use were low, or your car were cheap to run, cents per km might come out ahead — and it's far less admin. The honest answer is to keep a logbook so you can compare, then claim whichever method gives the better result that year.

As a rule of thumb: choose cents per km if you drive under 5,000 business km and want simplicity; choose the logbook if you drive a lot, have high running costs, or want to maximise the claim.

What you can't claim

Normal trips between home and work are private travel and generally aren't claimable, even if you do a bit of work at home. The exceptions are narrow — such as carrying bulky tools you can't leave at work. Only genuinely business travel counts toward your kilometres or your business-use percentage.

Car expenses are one line on a longer list — see the sole trader tax deductions checklist for the rest, and the working from home deduction if you also run part of your business from home.

This is general information, not tax advice — check ato.gov.au or a registered tax agent for your situation.