Claiming car expenses: logbook vs cents per km, the records you need, and the penalties

First: is the trip work travel?

• Travel from home to your usual workplace and back is private, even if it's a long way, you work odd hours, or you make a work call on the way. It isn't claimable.
• Travel between two separate jobs, from your usual workplace to a client, supplier or another site, or to a temporary work location, is generally claimable.
• You can claim home-to-work trips if you have to carry bulky tools or equipment your employer requires and there's nowhere secure to leave them at work, or if your job is genuinely itinerant (you work at a series of different sites).
• You can only claim a car you own, lease or have under hire purchase. If it's in your partner's name, you can't claim its costs.
• If your employer pays for the trip or reimburses the actual costs, you can't claim it as well.

Method 1: Cents per kilometre

You multiply your work kilometres by a set rate: 88 cents per kilometre for 2025–26, rising to 91 cents for 2026–27. You can claim up to 5,000 work kilometres per car each year, so a maximum of $4,400 for 2025–26.

The rate covers all of your car's running costs: fuel, servicing, registration, insurance, interest and depreciation. You can't claim any of those on top.

You don't need receipts, but you do need to show that you own the car and how you worked out your work kilometres. The ATO accepts a reasonable estimate based on a regular pattern, such as a 20km work round trip once a week for 48 weeks (960km), but you must be able to explain it. A diary, or the myDeductions tool in the ATO app, recording your work trips is the safest evidence. A round number picked at tax time isn't.

If you own the car jointly and each use it for your own separate work, you can each claim up to 5,000 work kilometres.

Example: Mia drives from her office to clients' premises about 60km a week for 50 weeks, so 3,000 work kilometres. Her claim for 2025–26 is 3,000 × 88 cents = $2,640.

ATO: Cents per kilometre method ↗

Method 2: Logbook

• Keep the logbook for at least 12 continuous weeks. Those weeks need to be representative of how you normally use the car, not your busiest stretch of the year.
• Record every work trip: the date, odometer at the start and end, kilometres, and the reason for the trip.
• Record the odometer at the start and end of the 12 weeks, the total kilometres, the work kilometres, and the work-use percentage.
• Record the odometer at the start and end of every year you claim using that logbook.
• A logbook lasts 5 years, as long as your work travel stays about the same. If your job or travel changes, or you get a different car, start a new one.
• Keep receipts or other written evidence for every expense. Fuel and oil can be estimated from your odometer records if you don't have every fuel receipt, but everything else needs a record.
• The logbook has to be kept at the time. One written up afterwards from memory, or from your calendar months later, isn't a logbook, and the ATO can usually tell.

You claim your car's actual running costs, multiplied by the percentage of its use that's for work. The percentage comes from a logbook, so the logbook is what makes the whole claim stand up.

Example: Tom's car costs $12,000 to run for the year: $4,000 fuel, $2,000 registration and insurance, $1,000 servicing and tyres, $1,000 loan interest and $4,000 depreciation. His logbook shows 60% work use, so he claims $12,000 × 60% = $7,200, far more than the $4,400 cents-per-km cap.

ATO: Logbook method ↗

Side by side

You can choose a different method each year, and for each car. Keeping a logbook, even if you end up using cents per km, gives you the choice and the best evidence of your work travel.

Utes, vans and business vehicles

• The two methods above are only for 'cars': vehicles designed to carry less than 1 tonne and fewer than 9 passengers. Some utes are cars under this test and some aren't; it depends on the manufacturer's payload rating, so check yours rather than assume.
• For other vehicles, such as a 1-tonne-plus ute, a large van or a motorbike, you claim the actual costs for the work portion. You still need to prove that work portion, and a logbook is the best way to do it.
• If the vehicle is owned by your company or trust, the business claims the costs, but private use by you or your family can trigger fringe benefits tax. Talk to us about how to set that up properly.

What gets claims into trouble

• Claiming a high work percentage, or 100%, with no logbook.
• Claiming 100% work use of the only car in the household, which is also used for shopping, school drop-offs and weekends.
• A logbook that's been written up after the fact, or that doesn't match fuel receipts, service records or the odometer.
• Claiming home-to-work travel as work travel.
• Claiming cents per km and the car's running costs, or claiming a car that isn't in your name.
• The same percentage, unchanged, year after year after a job change.

The ATO compares your claim with others in your job and income range, and it receives vehicle registration and insurance data. An unusually large or unsupported car claim is one of the most common triggers for a review.

The penalties for a claim you can't back up

• Failure to take reasonable care: 25% of the shortfall. You didn't do what a reasonable person in your position would have done, such as keeping basic records.
• Recklessness: 50% of the shortfall. You were aware, or should have been, that there was a real risk your claim was wrong, and claimed it anyway. Claiming a big car deduction year after year with no logbook, after being told you need one, is the kind of thing the ATO treats as reckless completion of a tax return.
• Intentional disregard: 75% of the shortfall. You knew the claim was wrong and made it on purpose.
• Penalties can be increased if you've had penalties before or you obstruct the ATO, and reduced, often by a lot, if you tell the ATO about the mistake before it contacts you.

If the ATO reviews your claim and you don't have the records, it disallows the part you can't prove. You then pay back the tax you saved (the 'shortfall'), plus interest, and a penalty on top. The penalty is a percentage of the shortfall, and it depends on how the ATO sees your behaviour:

What that looks like in dollars

Sam, a sole trader in the 37% tax bracket, claims $25,000 a year for a car with no logbook. The ATO reviews 4 years and allows $5,000 a year, the most Sam can reasonably show. That's $20,000 a year disallowed.

It happens: penalties of around $20,000 a year

This isn't just theory. We've seen a client hit with penalties of around $20,000 a year, on top of repaying the tax and interest, because the ATO treated unsupported vehicle claims as reckless. For a business owner with a heavy vehicle claim, the numbers above get bigger fast.

The ATO can usually go back 2 years for individuals with simple tax affairs and 4 years for people in business, and there's no time limit at all where it finds fraud or evasion.

Using a tax agent doesn't move the responsibility for your records to us. If you give us accurate, complete information and we make a mistake, you generally won't be penalised for it. But if the figures you give us aren't backed by records, the claim and the risk are yours.

Quick checklist

• Only claim trips that are genuinely work travel, not home to your usual workplace.
• Cents per km: a diary or app showing your work trips and how you worked out the kilometres, up to 5,000km per car.
• Logbook: a 12-week logbook kept at the time, odometer readings at the start and end of each year, and receipts for your car costs.
• Start a new logbook every 5 years, or sooner if your job, travel or car changes.
• If you've claimed more than you can support in a past year, talk to us. Telling the ATO before it contacts you usually means a much smaller penalty.

Not sure which method suits you, or whether your records will stand up? Bring your logbook or trip diary to your appointment and we'll work out the best claim you can safely make.