What’s new?
From 1 July 2026, the cents-per-kilometre rate for calculating work-related car deductions in Australia will be 91 cents per kilometre. This includes a temporary 2 cent uplift over the base rate of 89 cents. These are for those who choose the simplified “cents per kilometre method” for claiming car expenses. (softwaredevelopers.ato.gov.au)
Who can use this method?
- Eligible if you use your car for work-related travel (excluding commuting).
- Must be the vehicle owner or have written evidence of car use.
- No need to keep detailed logbooks when using this simplified method—only records of trips and odometer readings required under these rules.
Calculating your deduction: example
Suppose you use your car for eligible work travel of 5,000 km in the 2026-27 financial year, and you use cents-per-kilometre method. Your deduction would be calculated as:
5,000 km × $0.91 = $4,550
Compare this with if you used detailed logbook method—the latter may yield a larger amount if car expenses (fuel, maintenance, depreciation) are high—but requires much more record keeping.
Practical tips to maximize deductions
- Track only work-related trips—e.g. client meetings, work site visits—not daily commute.
- Keep notes of date, distance, and purpose of each trip—these could be useful in case of audit.
- If your total car expenses are high and you do a lot of travel, estimate both methods (cents-per-kilometre vs logbook) and choose the most beneficial for your tax situation.
- Don’t forget potential restrictions: certain vehicles may not be eligible, and private use must be excluded.
Case study: Freelancer example
Mia is a graphic designer who travels to multiple client meetings per month across the city and sometimes to regional towns. In 2026-27, she drives 12,000 km, of which 8,000 km is work travel. Using cents per kilometre, Mia can claim:
8,000 km × $0.91 = $7,280 deduction.
If her fuel, oil, maintenance, insurance and depreciation under logbook total $9,000 and eligible km is 40%, she would get $3,600—so cents-per-kilometre gives more for Mia in this scenario.
Key takeaways
- The cents-per-kilometre rate update is temporary uplift only for 2026-27, but the base rate (89 c/k) will apply for future indexations. (softwaredevelopers.ato.gov.au)
- Always assess whether the simplified method or logbook method works best for your situation.
- Know the difference between work travel vs commuting—only the former counts under this method.