If you use your own car to run your business, the running costs can add up to a meaningful deduction at tax time. The catch is that the ATO is particular about which trips count and what records you keep. Get those two things right and your claim stands on solid ground.
Which trips actually count
The starting point is simple: you can generally claim travel that is genuinely for your business. That includes a range of everyday journeys you probably already make.
- Visiting clients, customers or suppliers
- Travelling between separate work sites or jobs in the same day
- Picking up materials, stock or equipment
- Trips to the bank, the post office or your accountant for the business
The big exception is the trip between home and your regular place of work. That is treated as private travel and cannot be claimed, even if you take a work call along the way or drop something off. The drive that simply gets you to and from where you normally work is yours to fund, not a deduction.
The two methods you can use
For 2025-26 there are two ways to work out a car claim, and you choose whichever gives the fairer or larger result for your situation.
The cents-per-kilometre method lets you claim a flat rate of 88c per business kilometre, up to a maximum of 5,000 business kilometres for the year. It is simple, needs no fuel or servicing receipts, and suits people with modest business use. You still need a reasonable basis for the kilometres you claim, such as a diary of trips.
The logbook method uses your actual business-use percentage applied to your real running costs, with no kilometre cap. It takes more effort but often produces a larger claim when your business use is heavy or your vehicle costs are high.
Getting the logbook right
The logbook method only holds up if the paperwork is in order. The core requirement is a continuous 12-week logbook that represents your typical driving for the year.
- Keep the logbook for a continuous, representative 12-week period
- Record the date, odometer readings and business purpose of each trip
- Hold on to receipts for fuel, servicing, insurance, registration and repairs
- Note the make, model and engine details of the car
A valid logbook generally lasts five years, so you do not have to repeat it every year unless your usage pattern changes significantly. The business-use percentage from your logbook is then applied to your total running costs, and depreciation may also form part of the claim.
Other business travel
Cars are not the only travel you may be able to claim. When you take a genuine business trip, costs such as flights, accommodation and meals away from home can be deductible too.
The key is separating the business from the private. If a trip mixes a client meeting with a few days of holiday, only the business portion is claimable. You will need to apportion fairly and keep the documents that show the split, including an itinerary or travel diary for longer trips.
Records the ATO expects
Whatever method you use, your claim is only as good as the evidence behind it. Good records are what turn a reasonable deduction into one you can comfortably stand behind if you are ever asked.
- A logbook or a kilometre diary, depending on your method
- Receipts and invoices for running costs and travel expenses
- A clear note of the business reason for each trip
- Records kept for the period the ATO requires, generally five years
Keep in mind that travel between home and a regular workplace stays private no matter how careful your records are. The records support the trips that genuinely qualify; they cannot turn a private trip into a deductible one.
Choosing the method that suits you
For light or occasional business driving, cents-per-kilometre is usually the easier path and may be all you need. For tradespeople, mobile service businesses and anyone clocking up serious business kilometres, the logbook method often gives a better result and is worth the upfront effort. The only way to know for certain is to run both and compare, which is exactly the kind of check we can do with you.
If you would like help choosing the right method or setting up a logbook that does the job, book a chat at nebulaaccounting.au or call 0433 822 227.
This article is general information only and does not take account of your personal circumstances — it is not personal tax, financial or legal advice. Tax laws change and apply differently to different people. Nebula Accounting Pty Ltd is a registered tax agent (No. 26259377); please speak with us or check with the ATO before acting.