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)
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)
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)
- Rate will revert or adjust by indexation after 2026-27 in line with CPI and statutory formula. (softwaredevelopers.ato.gov.au)
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.