Case Studies
Leveraging Car Expense Deductions: The 91c/km Rate & Smart Claiming
Australia’s deduction rate for work-related car travel just rose; learn when to use cents-per-kilometre method, how to document trips, and avoid common traps.
By NomadicTax Research Team • 5-8 min read • July 13, 2026
## What’s New with Cents-Per-Kilometre Rate
For the **2026-27 income year**, the ATO has determined a temporary uplift in the **cents-per-kilometre** rate for eligible travel under the work-related car expense deduction method. The rate is **91 cents per kilometre**, up from the base 89c, with the increase applying for the full year of income beginning 1 July 2026. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/CentsperKilometreDeductionRateforCarExpenses?utm_source=openai))
This applies only when using the *cents-per-kilometre method*, one of the two ways to claim travel expenses in lieu of actual costs and logbooks.
## When & How You Can Use It
### Who’s eligible
- **Employees** and **sole traders** who drive for work (excluding home-to-work travel).
- Where travel is *necessary* for the job—e.g. visiting clients, transporting tools, business errands.
- You must keep records: **odometer readings**, date, purpose and distance of each trip; but you don’t need logbooks. You can claim up to **5,000 km/year** under this method. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/CentsperKilometreDeductionRateforCarExpenses?utm_source=openai))
### Method details
- Multiply total work-related km by **91c** up to the 5,000 km limit.
- Compare whether this likely yields a better deduction vs actual costs + logbook method.
- If logbook substantiation applies, claim actual percentage of all vehicle running costs including depreciation, fuel, insurance, registration—supporting with receipts.
## Examples
- Jenny drives 4,800 business kms in 2026-27: 4,800 × AUD 0.91 = **AUD 4,368** deduction.
- Mark drives 6,000 kms: limit is 5,000 → 5,000 × AUD 0.91 = **AUD 4,550**.
- If his actual running costs with a logbook exceed AUD 4,550, he may consider switching to logbook method for better deduction.
## Tips to Maximise Deduction & Stay Compliant
- Keep contemporaneous records: date, odometer reading, purpose.
- Maintain distinction between business travel and personal commuting (home-to-work is non-deductible).
- Consider vehicle eligibility: only when you own/use vehicle for business purposes.
- Choose method that offers higher return—logbook vs cents rate—and be consistent.
## Recent Changes & Background
- The base cents-per-km rate is **$0.89**, with a *temporary uplift* of **$0.02** for 2026-27. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/CentsperKilometreDeductionRateforCarExpenses?utm_source=openai))
- Rate will revert or adjust by indexation after 2026-27 in line with CPI and statutory formula. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/CentsperKilometreDeductionRateforCarExpenses?utm_source=openai))
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**Bottom line:** if you drive for work and utilise the cents method, the new rate gives a better deduction this year. Compare with logbook approach and maintain good records to ensure audit readiness.