When it comes to claiming business-related car expenses on your tax return, choosing the right method can help you maximise your deduction—whether you’re a sole trader, partnership, or employee. Let’s compare the two primary ATO-approved methods.

🛣️ 1. Cents‑per‑Kilometre Method

Rate for 2025–26: 88 c/km (this rate is all-inclusive and covers fuel, insurance, servicing, registration, depreciation, etc.)
Maximum claim: You can claim up to 5,000 business kilometres per car, per financial year
No logbook required, but you must be able to show how you worked out the kilometres
Applies to: Individuals (employees, sole traders, or partners) who own or lease the vehicle

🧾 What Records Should You Keep?

Even though a formal logbook isn’t required for this method, the ATO expects you to be able to reasonably substantiate your work-related travel if reviewed.

To support your claim, you should keep evidence such as:

Diary entries or calendar appointments clearly noting work-related trips
A travel log showing:
- Date of travel
- Starting point and destination
- Purpose of the trip
- Kilometres travelled
Letters or supporting documentation from your employer, confirming the nature of your work travel
Receipts or job records (e.g. visiting clients, attending meetings, offsite jobs)

The ATO may cross-check your kilometres against your work patterns, job description, or employer records. For example, claiming 5,000km with no work travel component in your role could raise red flags.

💡 Example

If you drive to a client site twice a week (30 km round trip), and do that for 40 weeks of the year:
30 km × 2 trips/week × 40 weeks = 2,400 km
Claim = 2,400 × $0.88 = $2,112 deduction

Keep notes of these trips in your diary, digital calendar, or job management system as backup in case of an ATO query.

📘 2. Logbook Method

How it works:
- Keep a 12‑week logbook that reflects your typical travel
- Use it to determine your percentage of work-related travel
- Apply that percentage to all car expenses (fuel, servicing, interest, insurance, depreciation etc.)
How long it lasts:
- Logbook is valid for 5 years, with annual odometer checks
Who can use it? Sole traders or partnerships with cars
Why choose it?
Ideal if you drive more than 5,000 business km or have high vehicle expenses—helping maximise your claim.

🔍 How to Choose the Right Method

Factor	Cents‑per‑km	Logbook
Ease	Simple—just record total km	Requires 12-week recordkeeping
Maximum kilometres	Capped at 5,000 km	Unlimited, but proportional
Vehicle costs covered	All running costs via one rate	All actual expenses, prorated
Best for	Light to medium business use	Heavy business travel, high costs

✍️ Claiming Steps

Estimate your work kms using diary, app, or trip logs
Choose your method—claim whichever gives the larger deduction
For logbook, maintain receipts and relevant documentation
Retain records for at least 5 years in case of an ATO review

✅ Ready to Boost Your Claim?

Choosing the right method can make a material difference to your bottom line. If you’re unsure which approach suits your situation—or want help setting up a logbook or tracking system—I’d be happy to help!

📩 Contact me at admin@bectax.com.au or book a meeting via Teams or in-person.

⚖️ Disclaimer

The information in this article is general in nature and is provided for educational purposes only. It does not take into account your individual circumstances, financial situation, or specific needs.

While I take care to ensure the information is accurate and up to date at the time of writing, tax laws and Australian Taxation Office (ATO) guidance can change, and the application of these laws can vary depending on your situation.

Before making any financial or tax decisions, I recommend seeking personalised advice tailored to your circumstances.

BEC Tax & Accounting Solutions is not liable for any loss or damage arising from reliance on the information contained in this article.

Published August 2025

Updated June 2026

Motor Vehicle Claims | Logbook vs Cents‑per‑Kilometre Methods