Car Expenses: Logbook Method vs Cents Per Km (2025-26)
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 |
Cents Per Km: Simple but Capped
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.
- No receipts required for running costs
- You must be able to show how you calculated your business km (diary, calendar entries)
- The rate covers all car expenses: fuel, depreciation, insurance, registration, servicing
- You cannot claim any separate car expenses on top of the per-km rate
Logbook Method: Bigger but More Effort
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.
- 12-week logbook: Record every trip (date, odometer, purpose, km) for 12 consecutive weeks
- Valid for 5 years: You do not need a new logbook each year unless circumstances change
- Keep all receipts: Fuel, insurance, registration, loan interest, servicing, tyres, depreciation
- Depreciation: You can claim decline in value of the car (cost limit of $69,674 for 2025-26)
When Logbook Wins
Logbook Method
Car costs $50,000, 70% business use, 20,000 km/year:
- Fuel: $4,000
- Insurance + rego: $2,500
- Servicing: $1,200
- Depreciation: $5,000
- Total: $12,700 x 70%
- Deduction: $8,890
Cents Per Km
Same car, 14,000 business km (capped at 5,000):
- 5,000 km x 88c
- Deduction: $4,400
- Difference: $4,490 less
When Cents Per Km Wins
Logbook Method
Older car, 30% business use, low running costs:
- Fuel: $2,000
- Insurance + rego: $1,800
- Servicing: $600
- Depreciation: $0 (fully depreciated)
- Total: $4,400 x 30%
- Deduction: $1,320
Cents Per Km
Same car, 4,000 business km:
- 4,000 km x 88c
- Deduction: $3,520
- Difference: $2,200 more
Logbook Tips
If you choose the logbook method, these tips help maximise your claim and stay compliant:
- Choose a representative 12 weeks: Pick a period that reflects your typical driving pattern
- Record odometer readings: Start and end of each trip, plus start and end of the logbook period
- Keep it for 5 years: Your logbook remains valid unless your work circumstances change significantly
- Use an app: The ATO accepts electronic logbooks from apps like the ATO's own myDeductions
Open the tax return app
Enter your income and deductions to see how car expenses affect your refund or tax payable.
Open Tax Return CalculatorFrequently Asked Questions
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.