Work-related car expenses are one of the most commonly claimed — and most audited — deductions in Australia. In 2026, the ATO allows two methods for claiming car expenses: the cents per kilometre method and the logbook method. Choosing the right method, and keeping the right records, can add hundreds or thousands of dollars to your refund while keeping your claim ATO-compliant. Here is your complete 2026 guide.
What Car Travel Can You Claim?
You can claim car expenses for work-related travel — but not for ordinary travel between home and your regular workplace. Deductible work car travel includes:
- Travelling between two workplaces (e.g., your regular job and a second job)
- Travelling from your workplace to an alternate location to carry out work duties (client visits, site inspections)
- Travelling from home to an alternate workplace for a temporary assignment
- Travelling to pick up supplies or equipment required for work
- Travel between home and a workplace that is not your regular workplace
You cannot claim: travel from home to your regular workplace (this is a private expense regardless of how far you live), or running errands that combine personal and work purposes unless the work component is clearly identifiable.
Method 1: Cents Per Kilometre (2025-26 Rate)
The cents per kilometre rate for 2025-26 is 88 cents per kilometre. You can claim up to 5,000 kilometres per year using this method — meaning the maximum claim is $4,400. You do not need to keep a logbook, but you must be able to show how you calculated the kilometres travelled (a diary, written log, or other reasonable evidence). This method suits lower-mileage workers.
Method 2: Logbook Method
The logbook method allows you to claim the work-use percentage of all actual car expenses — fuel, servicing, registration, insurance, depreciation, and interest on a car loan. The process:
- Keep a logbook for a continuous 12-week period that represents your typical travel pattern
- Record each trip: date, destination, purpose, odometer readings, and kilometres
- Calculate the business-use percentage: work kilometres / total kilometres x 100
- Apply that percentage to all actual car running costs for the year
- The logbook is valid for 5 years unless your work-use pattern changes significantly
The logbook method is superior for high-mileage workers or those who use their car predominantly for work — there is no 5,000 km cap.
Depreciation on Your Car in 2026
Under the logbook method, you can also claim depreciation on your car's cost using the declining balance method. In 2026, the car cost limit for depreciation is $69,674 — even if your car costs more, depreciation is capped at this figure. Apply your business-use percentage to the annual depreciation amount.
Frequently Asked Questions
Can I claim travel from home to work?
No. Travel between your home and your regular place of work is a private expense and is not deductible in Australia, regardless of the distance. The only exception is where you travel from home to a temporary or alternative worksite that is not your regular workplace.
What is the ATO car rate for 2025-26?
The cents per kilometre rate for the 2025-26 income year is 88 cents per kilometre, applicable to the first 5,000 kilometres of work-related car travel. This rate covers all running costs — you cannot claim fuel and servicing separately on top of this rate.
Do I need receipts for the cents per kilometre method?
No. You do not need fuel receipts or service records to use the cents per kilometre method — the rate is designed to cover all running costs. You do need a record of the number of kilometres you drove for work purposes and a reasonable basis for the calculation (trip diary, work calendar).
Not sure which car deduction method suits you? Contact AWTS and we will calculate the optimal approach for your 2026 tax return.
