ATO Cents Per Km Rate 2026-27: Car Expenses for Sole Traders

Short answer: For 2026-27 the ATO cents per kilometre rate is 91 cents, up from 88 cents in 2025-26, and it is capped at 5,000 business kilometres per car — a maximum deduction of $4,550. The rate covers fuel, registration, insurance, servicing and depreciation, so nothing may be added on top. Above 5,000 business kilometres, or where your car costs more than 91 cents per kilometre to run, the logbook method claims more. Home to work is private travel.

Car expenses are the deduction the Australian Taxation Office writes the most specific rules for, and the rules change every year. Below: the current rate, the two methods a sole trader can choose between, where the line falls between business travel and commuting, and exactly what the ATO expects in the log. For the wider picture, see sole trader taxes in Australia and expenses and receipts for sole traders.

What is the ATO cents per km rate for 2026-27?

The rate is set by legislative determination before each income year and applies to that year only.

Income year	Rate per km	Maximum claim (5,000 km)
2026-27	91 cents	$4,550
2025-26	88 cents	$4,400
2024-25	88 cents	$4,400
2023-24	85 cents	$4,250
2022-23	78 cents	$3,900
2021-22	72 cents	$3,600

The 2026-27 figure needs a caveat that most summaries leave out. The ATO states that 91 cents is a base rate of 89 cents plus a temporary one-off uplift of 2 cents for 2026-27 only, and that future indexation will be applied to the 89-cent base rather than to 91. Plan on the uplift disappearing rather than compounding. The ATO does not publish a reason for the uplift.

Two practical notes. The 91-cent rate comes from the Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2026, registered on 23 June 2026, and is summarised on the ATO’s cents per kilometre determination page. The ATO’s general guidance pages list prior-year rates and were last refreshed before that determination was made, so a page showing rates only up to 2025-26 is simply not yet updated rather than contradictory — check the determination for the current year. And rates never travel between years: an amended 2024-25 return uses 88 cents, not 91.

Which methods can I use to claim car expenses as a sole trader?

There are two, and eligibility is narrower than most people assume.

Method	Basis	Cap	Records needed
Cents per kilometre	Business km × the year’s rate	5,000 km per car, per year	Show ownership and how you worked out the kilometres
Logbook	Business-use % × actual costs	None	12 continuous weeks of logbook, plus receipts for everything

Both are available only to sole traders and partnerships where at least one partner is an individual, and only for a car: a vehicle designed to carry less than one tonne and fewer than nine passengers. Companies and trusts cannot use either method at all.

That definition excludes a lot of working vehicles. A one-tonne ute, a van rated at or over one tonne, a motorcycle or a minibus falls outside it, and you must use the actual cost method — real expenses, apportioned by business use, substantiated by receipts. If you drive a tradie’s ute, check its load capacity before assuming you can use cents per kilometre. Vehicle choice for the business is worth deciding alongside the rest of the setup covered in how to become a sole trader in Australia.

How does the cents per kilometre method actually work?

Multiply your business kilometres by the rate for the year, up to 5,000 kilometres per car. Nothing else goes into it.

The rate is all-inclusive. Fuel, registration, insurance, maintenance, repairs, tyres and decline in value are all inside those 91 cents. You cannot claim depreciation separately, you cannot add a service invoice on top, and you cannot claim interest on the car loan as well.

Receipts are not required for the kilometres, but two things are. You must be able to show you own or lease the car, and you must be able to show how you worked out the kilometres. A reasonable estimate is acceptable if it is built on something real: “22 km round trip to the depot, three days a week, 46 weeks = 3,036 km” is a defensible calculation. “About 5,000” is not, and a claim that lands exactly on the cap every year with no working behind it is the pattern the ATO looks for.

Two more mechanics matter. The cap is per car, so if you genuinely use two cars for the business you can claim up to 5,000 kilometres on each. And where a car is jointly owned and each owner uses it for their own income-producing purpose, each can claim up to 5,000 kilometres.

Travelling more than 5,000 business kilometres does not disqualify you — it simply caps the claim at 5,000. To deduct the rest, you need a logbook.

When is the logbook method worth the effort?

There is a clean test, because of how the logbook calculation is built. Your deduction is (business km ÷ total km) × total car costs, which is the same as business km × your actual cost per kilometre.

So compare your total annual car costs divided by your total kilometres driven against 91 cents. Above it, the logbook wins on every kilometre. Below it, cents per kilometre wins and costs you far less paperwork.

A worked example. Your car cost $11,400 to run over the year — fuel, insurance, registration, servicing, tyres and decline in value. It travelled 24,000 kilometres in total, of which 8,000 were business.

• Cost per kilometre: $11,400 ÷ 24,000 = 47.5 cents.
• Logbook claim: 8,000 × 47.5c = $3,800.
• Cents per kilometre claim: 5,000 (capped) × 91c = $4,550.

The flat rate wins here despite the cap, because a cheap car driven a long way costs well under 91 cents a kilometre. Reverse the facts — a newer car, $16,000 of annual costs including decline in value, 15,000 total kilometres, 9,000 business — and the cost per kilometre is about $1.07. The business-use percentage is 9,000 ÷ 15,000 = 60%, so the logbook claim is 60% × $16,000 = $9,600, and the cap makes cents per kilometre less than half of it.

The general shape: the newer and more expensive the car, and the higher your business-use percentage, the more the logbook is worth. Depreciation is usually what tips it, and depreciation is capped — the car limit is $69,883 for 2026-27 (it was $69,674 for 2025-26), and the maximum GST credit on a car above the limit is one eleventh of it, $6,353. A car costing more than the limit is written down from the limit, not from what you paid.

What counts as business travel, and can I claim the drive to work?

Travel between home and your place of business is private, and the ATO is firm about it. The distance you live from work is treated as your own choice, not a cost of earning income. Running the business from a home office does not automatically convert every trip either — the trip itself has to be for business purposes.

Travel that generally does count: from your home office or workshop to a client, a job site, a supplier or a wholesaler; between two work locations in the same day; to the bank or the accountant on business; and delivering goods or equipment.

Travel that generally does not: home to a fixed workplace and back, however early or late the shift; personal errands; and the private leg of any mixed trip — record the business detour, not the whole journey.

The awkward case is a contractor sitting on one client’s site for six months. That site can start to look like a regular place of work, which makes the daily drive commuting rather than business travel. Check your own facts against the ATO’s deductions for motor vehicle expenses guidance before you claim a long-running site run.

What does the ATO expect my logbook to contain?

The requirements are specific, and a logbook missing any of them is not a logbook.

Requirement	Rule
Minimum period	At least 12 continuous weeks, broadly representative of your usual travel
About the car	Make, model, engine capacity and registration number
For each journey	Start and end date, odometer reading at the start and end, kilometres travelled, and the reason, purpose and destination of the trip
For the period	The dates the logbook period begins and ends, odometer readings at the start and end of it, total kilometres travelled, and the business-use percentage for the period
How long it lasts	5 years — the year you establish it plus the following 4 income years — unless your circumstances change so it is no longer representative
In the 4 following years	Odometer readings for the start and end of the full period you owned the car that year, plus your business kilometres and business-use percentage
Two cars	A separate logbook for each, covering the same period

Entries should be made at the end of each journey or as soon as practicable afterwards. Paper is fine; so is the ATO’s own myDeductions tool in the ATO app, which uploads straight into myTax.

The logbook only sets the percentage. Under this method you also need the underlying expense records: receipts for registration, insurance, lease payments, servicing, tyres, repairs and interest, plus records of the purchase price and the effective life and method used for decline in value. Fuel and oil can be a reasonable estimate based on opening and closing odometer readings, fuel consumption and average price, rather than every docket. For electric vehicles, the ATO’s home charging rate is 4.2 cents per kilometre for the 2022-23 to 2025-26 income years, set under PCG 2024/2. No rate for 2026-27 had been published as at the date of this article, so confirm the current figure on the ATO’s logbook method page rather than assuming 4.2 cents carries forward.

Retention: five years after the end of the latest income year in which you rely on the logbook. Because a logbook lasts five years, one book can need holding for close to ten. All of it feeds the business schedule in the sole trader tax return.

How do I keep the trip log without it becoming a chore?

The claim is only ever as good as the record behind it, and trip logs are the record people rebuild from memory in October for a year that closed on 30 June. A reconstructed logbook reads like a reconstructed logbook.

Keel: Invoice Maker & Receipts, by Ilura Technology OÜ, is a private record-keeper for this job: log the trip when you finish it, photograph the fuel and servicing receipts as you get them, and send your invoices from the same app. It runs entirely on your iPhone — no account, no sign-in, no bank connection, no cloud sync — and its App Store privacy label reads “Data Not Collected”. Receipts are read on device by Apple Intelligence to pull out the merchant, total, tax and date.

The honest tradeoff is that nothing imports itself. There is no bank feed filling the log overnight; a trip exists because you logged it and a receipt exists because you photographed it. In exchange the records stay on your phone, the ledger is append-only and hash-chained, and at 30 June the Accountant Pack exports the year as a CSV plus a one-page summary PDF.

The free tier includes unlimited invoices, receipts and mileage logging, with a “Made with Keel” footer on invoices. Keel Pro is a one-time $249.99 Lifetime purchase, not a subscription. Keel: Invoice Maker & Receipts on the App Store.

Frequently asked questions

What is the ATO cents per km rate for 2026-27? 91 cents per kilometre, up from 88 cents in 2025-26. It comprises a base rate of 89 cents plus a temporary one-off uplift of 2 cents for 2026-27 only, so future indexation will run off 89 cents. The claim is capped at 5,000 business kilometres per car, giving a maximum deduction of $4,550.

How many kilometres can I claim without a logbook in Australia? Up to 5,000 business kilometres per car per income year under the cents per kilometre method. You do not need receipts for those kilometres, but you must be able to show you own the car and show how you calculated the distance. To claim beyond 5,000 kilometres you need a logbook covering at least 12 continuous weeks.

Can I claim the drive from home to work as a sole trader? Generally no. The ATO treats travel between home and your place of business as private, on the basis that where you live is your own choice. Running a home-based business does not change that by itself — the trip has to be for business purposes. Travel between two work locations in the same day does qualify.

Do I need receipts to claim cents per kilometre? Not for the kilometres themselves. You do need to show that you own or lease the car and to show how you worked out the distance, using a diary, calendar or the myDeductions tool in the ATO app. A reasonable estimate is acceptable if it rests on a real calculation, such as a known round trip repeated a known number of times.

How long is an ATO logbook valid for? Five years — the income year you establish it plus the following four — provided your pattern of use stays representative. If circumstances change materially, such as a change in the type of work your business does, a new job or a house move, you need a fresh 12-week logbook. You can also start a new logbook at any time. In each of the four following years you must still record odometer readings for the start and end of the period you owned the car that year.

Is cents per kilometre or the logbook method better? Divide your total annual car costs by your total kilometres driven. If the result is above 91 cents per kilometre, the logbook usually claims more; below it, the flat rate does and costs far less effort. Newer, more expensive cars with high business use favour the logbook, because decline in value is what tips the arithmetic.

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This article is general information, not tax advice. Consult a qualified Australian tax professional.