How Many Cents per Kilometre Can You Claim for Tax in Australia?

Car expenses are one of the most common work‑related car expenses Australians claim at tax time. Whether you’re a sole trader visiting clients or an employee running work‑related trips between sites, you can often claim a tax deduction for motor vehicle use. The simplest path is the cents per kilometre method a straightforward set rate you multiply by your work‑related kilometres.

For the 2024–25 income year, the Australian Taxation Office (ATO) set the km rate at 88 cents per kilometre, capped at 5,000 business kilometres per car, per financial year. This single rate covers your running costs (fuel, rego, insurance, servicing, depreciation, etc.), so you don’t claim actual expenses on top.

How Many Cents per Km Can I Claim on My Tax Return?

Under the cents per kilometre method (also known as the cents per km method), you multiply your eligible number of kilometres by the current ATO rate:

• 88c/km for 2024–25
• Maximum 5,000 km per car, per tax year (per income year)
• This rate is designed to cover all the typical running costs of your vehicle, including:
  • Fuel and oil
  • Registration and insurance
  • Servicing and maintenance
  • Depreciation (wear and tear on the car)

That means you don’t need to keep individual receipts for these costs. Instead, you simply keep track of your work-related kilometres and multiply them by $0.88.

Example: You recorded 3,500 business kilometres during the financial year.
3,500 × $0.88 = $3,080 car expense deduction.

Because this method is an all‑inclusive km rate, you don’t add actual costs like fuel or insurance separately.

What Counts as Work‑Related Travel?

Eligible work purposes typically include:

• Driving from one workplace to another (for example, between client sites)
• Visiting suppliers or customers
• Transporting bulky tools or equipment that can’t be stored at work
• Attending off‑site training

Your everyday commute from home to your regular workplace is private travel and not deductible.

Tip: Keep simple record‑keeping trip notes, an app, or odometer readings to show how you calculated your work‑related kilometres. While written evidence (receipts) isn’t required under this method, a reasonable basis is.

How Many Kilometres Can You Claim Without Receipts?

A common question is: how many cents per km can I claim without receipts?

Under the cents per kilometre method, you don’t need receipts for individual expenses like fuel or servicing. However, you must still have a reasonable basis for your claim. The ATO expects you to keep a record such as:

• A diary of work trips
• Odometer readings
• A log of client visits or shift locations
• An app that tracks your travel

You can claim up to 5,000 business kilometres with no receipts for running expenses under the cents‑per‑kilometre method just maintain a reasonable record of your work‑related travel (for example, odometer readings at the start/end of the income year, or a simple trip diary).

Worked example:
4,200 km × $0.88 = $3,696 deductible car expenses.

How Much Cents per Km Can I Claim for Work Travel?

The cents per kilometre method applies only to work-related travel. This includes:

• Travelling between separate workplaces (e.g., different schools or hospitals)
• Driving to a client’s premises or job site
• Carrying bulky tools or equipment (that you can’t store at work)
• Attending work-related conferences or training sessions

It does not include your everyday commute from home to your usual workplace.

Example:
A tradesperson drives 4,200 km in a year, mostly between job sites and supply stores. Their claim is:
4,200 km × $0.85 = $3,570 deduction

Is There a Maximum Claim for the Cents per Km Method?

Yes. The maximum you can claim under this method is 5,000 km per car, per year.

If you drive more than 5,000 km for work purposes, you can:

1. Claim up to 5,000 km using the cents per km method, OR
2. Use the logbook method, which requires detailed records but may give a higher deduction if you use your car heavily for work.

Example:
A FIFO worker drives 6,800 km for work during the year. They can only claim 5,000 km × $0.85 = $4,250 under the cents/km method. If they want to claim the full 6,800 km, they need to use the logbook method.

Cents per Kilometre Method vs Logbook Method

There are two main ways to claim motor vehicle expenses in Australia:

Cents per Kilometre Method

• Simple: multiply total kilometres (for business purposes) by the ATO rate
• No receipts for running costs
• Capped at 5,000 km per car, per financial year
• Good for occasional work‑related trips

Read Full Guide - Cents Per Kilometre Method: 2024 - 2025 Guide

Logbook Method

• Claim actual expenses (fuel, servicing, rego, insurance, tyres, interest, depreciation) × business use percentage
• Requires a valid logbook period of at least a 12‑week period (kept every five years or when your usage changes)
• Can yield a larger deduction if your business use is high

Read Full Guide - ATO Logbook Method Explained | 2024 - 2025 Guide

When to choose which?

• Use cents per km method if your work‑related travel is moderate and you prefer low‑friction record‑keeping.
• Use the logbook method if you have high business use, higher actual expenses, or you expect the business‑use percentage to be substantial.

Definitions That Matter (ATO‑style clarity)

• Car vs other vehicles: For tax, a “car” generally excludes vehicles designed to carry a load of one tonne or more, or nine or more passengers. Those may require the actual costs method rather than car‑specific rules.
• Business kilometres: Kilometres you drive in the course of earning your income.
• Type of vehicle: The rules apply to most standard passenger cars; different rules can apply to utes/vans over 1 tonne or motorcycles.
• Set rate: The ATO cents per kilometre rate (the “ATO cents” figure) applies uniformly regardless of engine size or fuel type.

Common Mistakes With Work-related car expenses

1. Claiming commuting as work‑related travel (home ↔ regular workplace).
2. Estimating kilometres without any basis keep record‑keeping like odometer readings.
3. Exceeding the cap (claiming more than 5,000 km under the cents‑per‑km method).
4. Mixing methods for the same car in the same tax return choose either logbook method or cents per kilometre method.
5. Double‑claiming where your employer provides a reimbursement for travel expenses.

Special Cases and Practical Examples

• Sole trader / small business:
  A sole‑trader consultant drives 2,800 business kilometres to client meetings. They pick the cents per km method for speed: 2,800 × $0.88 = $2,464. Later, if business use grows, they can switch to the logbook method next year.
• High running costs:
  A small business director pays significant running costs (insurance, tyres, servicing) and has a high business‑use percentage. They keep a log book over a 12‑week period and switch to actual expenses for a larger deduction.
• Multiple cars:
  The 5,000 km limit is per car. If you operate more than one eligible motor vehicle, each has its own cap ensure you don’t claim the same work‑related trips twice.
• Reimbursements:
  If your employer reimburses your travel expenses at or above the cents per kilometre rate, you generally can’t also claim a deduction for those kilometres in your tax return.

Quick Calculator (DIY)

1. Tally your total kilometres driven for business purposes in the income year.
2. Multiply by the ATO cents per kilometre rate (currently $0.88).
3. Check you don’t exceed 5,000 km.
4. Keep simple record‑keeping (trip list or odometer readings) in case the ATO asks.

Cents per Km FAQ

How many cents per km can I claim for tax in 2025?
88 cents per kilometre (ATO set rate) up to 5,000 km per car.

Do I need receipts or written evidence?
Not for running costs under this method, but maintain a reasonable record of work‑related kilometres (diary, app, odometer readings).

Can I claim more than 5,000 km?
Not with the cents per kilometre method. Consider the logbook method (and keep a 12‑week period logbook) if your business use is high.

Does the rate change?
Yes, the ATO reviews it. The cents per kilometre rate is 88c/km for 2024–25.

Which method gives a bigger tax deduction?
It depends on your business‑use percentage and actual expenses. Heavy drivers with high running costs often benefit from the logbook method; occasional drivers usually prefer the simplicity of the cents‑per‑km method. Consider seeking professional advice from a tax agent.

Wrap‑Up

For many taxpayers in Australia, the cents per kilometre method is the quickest path to valid car expenses claims: a single km rate, simple record‑keeping, and no receipt trail for running expenses. If your driving is heavy or your business use is high, the logbook method (with a logbook period of at least 12 weeks) and actual expenses may deliver more.

Lodge Pro helps you choose the right method, calculate your car expense deductions, and complete your tax return with confidence whether you’re a sole trader or an employee.

Ready to get your maximum refund? Lodge your online tax return with Lodge Pro today fast, simple, and stress-free.