What Changed
For the 2026-27 income year, the cents-per-kilometre rate for claiming motor vehicle expenses increases to 91 cents per kilometre, up from the indexed base of 89 cents. This includes a temporary one-off uplift of 2 cents/km.(softwaredevelopers.ato.gov.au)
How It Works
- This rate applies if you elect to use the cents-per-kilometre method rather than tracking actual vehicle expenses.(softwaredevelopers.ato.gov.au)
- It covers car use for work-related travel where keeping a log of actual kilometres is acceptable under the method.
- Eligible taxpayers must have a vehicle and purpose that meets work-related use (excluding commuting and personal use).
Fixed vs Actual Cost Methods
| Method | Cents per Kilometre | Actual Cost Method |
|---|---|---|
| Simpler; claim without itemised running costs | Requires detailed records of all vehicle expenses; may claim more if high use or high costs | |
| Has cap on maximum kilometres allowed | Allows depreciation, fuel, insurance, registration, etc. |
If you expect actual vehicle costs (fuel, maintenance, depreciation) are high, it could still pay off to track those rather than use the simple cents method.
Actionable Steps for Taxpayers
- Estimate your work-kilometres for the year and multiply by 91c to see whether the cents method or actual cost yields a higher deduction.
- Maintain a logbook or digital record to show validity of work-related travel.
- Confirm with your employer whether any employer reimbursements are excluded (i.e. you must have paid the cost yourself and not been reimbursed).
Example
Mark rides his motorcycle occasionally for sales visits. He estimates 10,000 km work-related travel for 2026-27. Using the cents method: 10,000 × $0.91 = $9,100. If his total actual costs (fuel, servicing, insurance, depreciation) sum to $11,000, the actual cost method may be more beneficial—but only if he has thorough supporting records.
Summary
The 91 cents per kilometre rate offers a small but meaningful boost. For many, the simplicity and reduced administrative burden make it attractive. However, it’s still worth comparing both methods and choosing based on your specific vehicle use and expense profile.