Using a private car for business purposes

Current rate per kilometre

Use the rate for the financial year in which the work-related travel occurred. The ATO rate covers car running costs such as fuel, maintenance, registration, insurance and depreciation. You cannot add those costs again when claiming under this method.

What should an employer pay for work travel?

There is no single ATO reimbursement rate that overrides every workplace arrangement. Vehicle-payment entitlements can differ by industry, duties and the applicable award or enterprise agreement. Check the required rate, authorisation for using your own car, and claim procedure with your employer before travelling. An employment contract or company policy must also respect any applicable minimum entitlements.

A payment calculated per kilometre is generally an allowance included in your assessable income. Receiving it does not automatically make the payment tax-free or establish an equal tax deduction. You calculate any eligible deduction separately.

A repayment of actual expenses supported by receipts is treated differently from a kilometre allowance. You generally cannot claim a personal tax deduction for an expense your employer has reimbursed.

The 5,000 km tax-deduction limit

The cents-per-kilometre method allows a maximum of 5,000 eligible work-related kilometres per car, per income year. This is a limit on that deduction method, not a general limit on the distance your employer can pay for.

For example, 2,400 eligible kilometres in 2026–27 give a deduction of 2,400 × $0.91 = $2,184. At 5,000 km, the maximum under this method is $4,550 per car. These are deductions from taxable income, not cash refunds of those amounts.

If you drive more than 5,000 eligible kilometres, the logbook method may allow you to claim the work-related share of actual car expenses, provided you have the required records. You choose one method for a car for the year; you cannot use the kilometre rate for the first 5,000 km and add actual car expenses for the rest.

Which vehicles and trips qualify?

These car-expense methods generally apply to individuals, including sole traders, and partnerships with at least one individual partner. Companies and trusts use different rules for their own vehicle expenses.

The vehicle must meet the tax definition of a car: designed to carry less than one tonne and fewer than nine people, including the driver. Eligible electric and hybrid cars use the same cents-per-kilometre rate. Motorcycles and vehicles outside that definition require an actual-expense approach instead.

For an employee’s car deduction, you generally need to own or directly lease the car and pay the relevant costs yourself. A car supplied through a salary-sacrifice or novated-lease arrangement is not treated as your own car for these methods.

Travel to clients, between workplaces or to an alternative workplace can qualify when it meets the work-related travel rules. Ordinary travel between home and your regular workplace is generally private, even if you work unusual hours. Keep commuting separate from eligible business trips.

Records for mileage claims and a car logbook

For the cents-per-kilometre method, you do not need a receipt for every running cost, but you must be able to explain your calculation. A mileage record showing the date, destination, work purpose and distance of each trip can support your claim. The 5,000 km limit is not an automatic deduction without evidence.

The logbook method normally needs a representative period of at least 12 continuous weeks. Record work-trip dates, purposes, starting and finishing odometer readings and distances. Keep the logbook-period totals, annual odometer records and evidence of actual expenses. A logbook can generally be used for five years, but changes in circumstances or driving patterns need to be taken into account.

Employer claims may require additional details, such as approval, the vehicle registration or a project reference. Keep those requirements alongside your tax records.

Track work kilometres with Motolog

Motolog helps you record trips automatically, classify business and private driving, and prepare mileage reports. Official rates are available where supported, and custom rates let you use an agreed employer rate. Check the financial year, claim method and trip purposes before submitting a report.

Explore automatic mileage tracking with Motolog, or compare options on our pricing page.