Car expenses: logbook vs cents per km
The ATO gives you two methods for claiming car expenses. The right choice depends on your business-use percentage, how far you drive, and whether you want simplicity or a bigger deduction.
| Logbook method | Cents per km | |
|---|---|---|
| Rate / basis | Actual expenses x business % | 88c/km (2025-26) |
| Maximum claim | No cap (based on actual costs) | $4,400 (5,000 km x 88c) |
| Record keeping | 12-week logbook + all receipts | Reasonable estimate of km |
| Covers | Fuel, insurance, rego, depreciation, servicing | Everything (single rate) |
| Best for | High business use, expensive cars | Low km, simple claims |
The cents per km method lets you claim 88 cents for each business kilometre driven, up to a maximum of 5,000 km per year. That gives a maximum deduction of $4,400.
The logbook method claims the business-use percentage of your actual running costs. You need a valid 12-week logbook and receipts for all expenses.
Logbook method
Car costs $50,000, 70% business use, 20,000 km/year:
Cents per km
Same car, 14,000 business km (capped at 5,000):
Logbook method
Older car, 30% business use, low running costs:
Cents per km
Same car, 4,000 business km:
If you choose the logbook method, these tips help maximise your claim and stay compliant:
What is the cents per km rate for 2025-26?
The ATO rate for the 2025-26 financial year is 88 cents per kilometre. You can claim up to 5,000 business kilometres, giving a maximum deduction of $4,400. No receipts are required, but you must be able to show how you calculated your business kilometres.
How long is a logbook valid for?
A logbook must cover a continuous 12-week period and is valid for 5 years, provided your work-related use of the car stays broadly the same. If your circumstances change significantly (e.g., new job, new work location), you need to complete a new logbook.
Can I switch between logbook and cents per km methods?
Yes, you can choose a different method each financial year. It's worth calculating both to see which gives the larger deduction. You cannot mix methods for the same car in the same year.
When does the logbook method give a bigger deduction?
The logbook method typically wins when you have high business-use percentage (above 60%), an expensive car with high running costs, or you drive more than 5,000 business kilometres per year. It also covers fuel, insurance, registration, depreciation, and servicing.
Tax Accuracy & Sources
Compares the ATO logbook method (actual costs × business-use %, requires a 12-week logbook valid 5 years) with cents-per-km (88c/km, capped at 5,000 business km for 2025-26). Includes the 2025-26 car depreciation cost limit of $69,674.