Cents per km vs logbook: which car method suits you

There are exactly two ways an employee can claim car expenses for a car they own or lease. Choosing well is worth several hundred dollars a year.

flowchart TD
  km[Work kilometres this year] --> cap{Over 5,000 work km?}
  cap -->|No| cents[Cents per km is usually simpler]
  cap -->|Yes| log[Keep a 12-week logbook]
  log --> bigger{Is the business-use share of real costs bigger?}
  bigger -->|Yes| useLog[Use the logbook]
  bigger -->|No| useCents[Cents per km still wins]

Cents per kilometre

You multiply work-related kilometres by a set rate. The rate for the year you are claiming applies — not the current one:

Income year	Rate
2026–27	91c
2024–25 and 2025–26	88c
2023–24	85c

The cap is 5,000 work-related kilometres per car, per year. At 91c that is a maximum deduction of $4,550 for 2026–27.

The rate covers everything: fuel, registration, insurance, servicing, repairs, and depreciation. You cannot add any car cost on top.

You don't need fuel receipts, but you do need to be able to show how you worked out the kilometres. A diary of work trips is the usual answer, and "I drive about 100 km a week" is not.

Logbook

You work out the business-use percentage of the car and claim that share of your actual costs — fuel, insurance, rego, servicing, interest, and decline in value.

• Keep a logbook for a continuous 12-week period that is representative of your year.
• That logbook is then valid for five years, as long as your pattern of use doesn't materially change.
• Record odometer readings at the start and end of the period, and the start and end of each year.
• Keep receipts for the running costs you claim (fuel and oil can be estimated from odometer readings).

The break-even

Rough rule: work out your total annual running cost per kilometre, including depreciation. For most modern cars that lands somewhere between 55c and 90c per kilometre. Then:

• Under 5,000 work km: cents per km is usually competitive and much cheaper to administer, because the per-km rate is deliberately generous.
• Well over 5,000 work km: the logbook almost always wins, because cents per km stops paying you after kilometre 5,000 while your costs keep going.
• Expensive car, or one you're depreciating: the logbook wins earlier, because depreciation on a $60,000 car is real money the flat rate can't reflect.

A worked example. 9,000 work kilometres, 12,000 private, so 43% business use. Total car costs including depreciation: $14,000.

• Cents per km: capped at 5,000 km × 91c = $4,550
• Logbook: 43% × $14,000 = $6,020

The logbook is $1,470 better, and the price of that is twelve weeks of noting trips.

You can mix and switch

You can use a different method for each car, and you can change methods between years for the same car. So the sensible play is to keep a logbook once, see what your business-use percentage actually is, and then choose with real numbers instead of a guess.

The trap in both methods

Both require you to know which trips were work-related, and when. The logbook needs purpose and odometer readings; cents per km needs a defensible calculation of the kilometres.

Reconstructing a year of trips from calendar invites and vague memory is where deductions quietly shrink. Recording the trip when you park takes about ten seconds, and it's the only version of the record that survives a question twelve months later.