Note:
Claiming your ute or work car expenses correctly is one of the easiest ways for Australian tradies to lower their annual tax bill. Pair your vehicle deduction with our Sole Trader Tax Calculator to estimate your net take-home pay after tax time.
What Is the Cents per km Method?
The cents per km method is the simplest way to claim work-related vehicle expenses on your tax return. The ATO gives you a set flat rate per kilometre driven for work purposes. For the 2026-27 financial year, this rate is 91c/km (up from 88c in FY 2025-26).
This flat rate is designed to cover ALL your vehicle running costs — fuel, registration, insurance, servicing, repairs, tyres, and depreciation. You can claim up to a maximum of 5,000 kilometres per car per year using this method, providing a maximum deduction of $4,550.
The biggest advantage is that you don't need to keep piles of petrol or service receipts. You just need to show a reasonable estimate of your work trips (e.g. Google Maps logs or diary notes).
Current ATO Rates — Cents per km (2024 to 2027)
The ATO regularly updates the cents per kilometre rate to reflect rising fuel prices and maintenance costs. Here are the rates for recent financial years:
| Financial Year | ATO Rate per KM | Max Claim (5,000 km) |
|---|---|---|
| FY 2026-27 (Current) | 91 cents / km | $4,550 |
| FY 2025-26 | 88 cents / km | $4,400 |
| FY 2024-25 | 85 cents / km | $4,250 |
How to Calculate Your Deduction (Worked Example)
Let's say you're a sparky doing service callouts across Sydney. You estimate you drive 4,200 km between job sites, picking up parts from supply houses, and attending quotes throughout the year.
Using the 2026-27 rate: 4,200 km × $0.91 = $3,822 deduction.
That $3,822 comes straight off your gross taxable income. Make sure your hourly rate covers your vehicle wear and tear by checking your numbers in our Hourly Rate Calculator.
The Logbook Method Explained
The alternative option is the Logbook method. This allows you to claim the actual business-use percentage of your total vehicle operating expenses.
To use this method, you must keep a continuous logbook for at least 12 weeks to determine your business-use percentage (e.g. 75% work use). Your logbook remains valid for 5 years. You must also keep all receipts for fuel, rego, insurance, repairs, and depreciation claims.
Paperwork vs Tax Savings:
If you drive more than 5,000 business km per year or operate a high-cost ute, the Logbook method almost always yields a substantially larger tax deduction than the 5,000 km capped cents-per-km method.
Cents per km vs Logbook — Which Is Better for You?
If you drive under 5,000 km for work and hate keeping receipts, the cents per km method is ideal. However, if you drive 15,000+ work km or have heavy finance/depreciation expenses on a new ute, the logbook method is worth the effort.
What Counts as Work-Related Travel for Tradies?
- ✅ CAN claim: Driving between different job sites, travelling to suppliers or trade desks, carrying bulky tools that cannot be safely left at work sites, and driving to client quotes.
- ❌ CANNOT claim: Driving from home to your regular depot or workshop (normal daily commute), private weekend trips, or personal errands during work hours.
Record Keeping Tips
For the cents per km method, keep a simple diary, Google Maps timeline, or app record to justify your kilometre estimate. For the logbook method, ensure your 12-week logbook records date, start/end odometer readings, kilometres travelled, and the business reason for every single trip.