Why the Change Matters
If you're claiming car expenses using the cents-per-kilometre method, your rate has increased from 89¢ to 91¢ per kilometre for the 2026-27 income year. This is a modest increase, but over numerous trips it adds up, especially for remote or mobile workers. (softwaredevelopers.ato.gov.au)
Two Methods: Which One Works Best
| Method | What it covers | When it’s worthwhile |
|---|---|---|
| Cents-per-kilometre | Fixed rate per business kilometre up to a capped limit—no need for receipts. | Best if you travel modest distances and car expenses (fuel, maintenance, depreciation) are small relative to earnings. |
| Logbook method | Actual costs proportioned to business use—needs detailed record-keeping. | Superior when business usage is high or expenses are substantial. |
Actionable Tips
- If you primarily use the cents method, update your payroll or tax software to use the 91¢ rate.
- Keep good records of odometer readings and trips—limit still applies.
- If you occasionally use your car for work, compare your actual costs vs cents method to see which gives greater deduction.
- For contractors, mobile workers, or gig economy participants, it may be more beneficial to maintain a logbook if travel is frequent.
Example Comparison
Suppose you drive 10,000 business kilometres in a year.
- At 89¢/km, that equals $8,900 deduction.
- At 91¢/km, it becomes $9,100 — an extra $200.
If your total car expenses (fuel, wear and tear, insurance) are $12,000 for business use, and your business percentage is 80%, logbook method gives $9,600 deduction. In that case, logbook still wins.
Things to Watch Out For
- The cents-per-kilometre method is capped (for example, 5,000 business km commonly) so for high-mileage users it may not apply.
- Must elect to use the cents method and meet eligibility requirements.
- If changing methods, documentation helps in case of audit.
Conclusion
While not a high-stakes reform, the updated rate is a useful reminder to review how you claim vehicle deductions. For some taxpayers, switching to the logbook method or revisiting travel usage could yield better tax outcomes.