Motor Vehicle Expenses
Tax deductions for work-related car use, claimable using the cents per kilometre method (91 cents/km up to 5,000 km) or logbook method.
Motor vehicle expenses for work-related travel can be claimed as a tax deduction using one of two methods. The cents per kilometre method allows you to claim a flat rate of 91 cents per kilometre (for 2026-27, up from 88 cents in 2025-26) for up to 5,000 business kilometres, without needing detailed records — though you must be able to show how you calculated the kilometres. This gives a maximum deduction of $4,550.
The logbook method requires you to maintain a logbook for a continuous 12-week period, recording every trip (business and private) to determine the work-related percentage of your car use. You then apply this percentage to your total car expenses for the year — including fuel, registration, insurance, servicing, tyres, depreciation, and interest on a car loan. The logbook is valid for 5 years provided your driving patterns haven't changed significantly.
Important: you cannot claim car expenses for ordinary commuting (home to regular workplace and back), as this is considered private travel. Work-related car use includes travelling between two separate workplaces, travelling from your workplace to a client's site, and travelling to different locations during the day for work purposes. If you carry bulky tools or equipment and have no secure storage at work, you may be able to claim the trip between home and work.
How it works
Work-related motor vehicle expenses can be claimed using one of two methods: the cents per kilometre method, a flat rate applied to your work-related kilometres up to a 5,000km cap per year, or the logbook method, which applies a work-use percentage to your actual running costs. For 2026-27 the cents per kilometre rate is 91 cents, up from 88 cents in 2025-26, giving a maximum possible deduction of $4,550 under that method without needing a logbook.
In practice, the cents per kilometre method just needs a reasonable, explainable basis for how you calculated your work kilometres — no receipts required. The logbook method is more involved: you keep a logbook for a continuous 12-week period recording every trip, business and private, to establish a work-use percentage, then apply that percentage to your total car costs for the year, including fuel, registration, insurance, servicing, tyres, depreciation, and loan interest. A completed logbook remains valid for five years as long as your driving pattern hasn't changed significantly.
The most important limit to understand is that ordinary commuting — driving from home to your regular workplace and back — is never deductible, no matter how far the distance. What is deductible is travel between two separate workplaces, travel from your workplace to a client's site, and similar work-purpose trips during the day. A narrow exception exists for people who carry bulky tools or equipment with no secure storage available at work, who may be able to claim the home-to-work trip in that specific circumstance.
Example: cents per kilometre claim under the 5,000km cap
A tradesperson drives 4,200 work-related kilometres during the year, using the cents per kilometre method rather than keeping a logbook.
At 91 cents per kilometre for 2026-27, the deduction is 4,200 × $0.91 = $3,822. Because this is under the 5,000km cap, no logbook is required, though the tradesperson still needs a reasonable basis for the kilometre figure.
Related Terms
Taxable Income
Your assessable income minus allowable deductions — the figure used to calculate your income tax.
Income Tax
Tax levied by the federal government on your taxable income, calculated using progressive tax brackets.
Work From Home Deductions
Tax deductions for expenses incurred when working from home, claimable using the fixed rate method or actual cost method.
Travel Expenses (Work-Related)
Deductions for travel costs incurred for work purposes, including accommodation, meals, and transport when travelling away from home overnight.
Sole Trader
An individual who runs a business in their own name, reporting business income and expenses in their personal tax return.