Two claim methods, and why the right one depends on your kilometres
You drive to job sites, client meetings, the supplier warehouse.
Can you actually claim that — and if so, how much?
The short answer
Yes, if the vehicle is genuinely used for business — but how you claim, and how much, depends on your business structure and how many business kilometres you drive. Sole traders and partners have a choice between two methods; companies and trusts are restricted to actual costs only.
The two methods available to sole traders and partners
| Cents per kilometre | Logbook method | |
|---|---|---|
| How it works | Flat rate × business kilometres driven | Business-use % × actual running costs |
| Current rate/cap (2026–27) | 91 cents per km, capped at 5,000 km per car ($4,550 max) — up from 88 cents in 2025–26 | No cap — based on a 12-week logbook and actual costs |
| Records needed | A reasonable basis for your estimate — no formal logbook required | A genuine 12-week logbook, plus receipts for all running costs |
| Best suited to | Lower business mileage, simpler record-keeping | Higher business mileage or a vehicle with significant running costs |
The cents per kilometre rate already factors in fuel, servicing, insurance, registration and depreciation — you can't claim any of these separately on top of it. Once your business use exceeds 5,000 km a year, the logbook method is the only way to claim the full amount. If you're finalising a 2025–26 tax return, the applicable rate for that year remains 88 cents per km — the 91-cent rate applies to the 2026–27 income year onward.
Why the logbook method often wins for genuine business use
If a tradie drives 12,000 business kilometres a year in a ute with real running costs — fuel, servicing, insurance, rego — totalling $15,000, and 70% of that use is business-related, the logbook method could produce a $10,500 deduction. The cents per kilometre method would cap the same claim at $4,550, regardless of actual costs. The trade-off is the extra record-keeping: a genuine 12-week logbook and retained receipts for every running cost.
What doesn't count as business travel
Ordinary travel between home and your regular workplace is private travel, not business travel — this catches many people out, particularly sole traders who assume every trip in a work vehicle is automatically deductible.
Companies and trusts — a different set of rules
If your business operates as a company or trust, you can only claim the actual costs of motor vehicle expenses that are genuinely part of running the business — travelling between business premises, visiting clients, picking up goods. Neither the cents per kilometre method nor the logbook method is available; claims must be based on actual receipts.
Keeping a logbook properly
Record every trip for a continuous 12-week period that's genuinely representative of your normal driving.
Note the date, odometer readings, kilometres travelled, and the specific business purpose of each trip.
Keep odometer readings at the start and end of the income year.
Retain receipts for every vehicle expense throughout the year — fuel, servicing, insurance, registration.
A quick self-check
Am I confident whether my typical annual business kilometres are above or below 5,000?
Have I actually kept a genuine 12-week logbook, or am I estimating my business-use percentage?
Am I correctly excluding ordinary home-to-work travel from my business kilometres?
Does my business structure restrict me to the actual-cost method only?
Free official resource
The ATO sets out both claim methods for motor vehicle expenses, including the current rate and structure-specific rules.
ato.gov.au — Motor vehicle expenses https://www.ato.gov.au/tax-and-super-professionals/for-tax-professionals/prepare-and-lodge/tax-time/tax-time-toolkits/tax-time-toolkit-small-business/small-business-guides/motor-vehicle-expenses
When should you get professional help?
you're not sure which method gives you the better outcome for your driving pattern;
you want your logbook and record-keeping set up properly before you start;
your business operates as a company or trust and you want the actual-cost claim done correctly; or
you use the vehicle for both business and personal purposes and want the apportionment handled properly.
Continue learning
→ Should I Buy a Vehicle Through My Business or Personally?
→ Business Expense or Personal Expense — Where Is the Line?
→ What Accounting Records Do I Need to Keep — and for How Long?
SKC Accounting | Knowledge Centre | Knowledge Guide 054
Last reviewed: August 2026
General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.