Cents Per KM Tax Deduction

Who can claim a cents per km deduction

As an employee, a sole trader, in a partnership, or as a business owner, you might be eligible to claim a cents per km tax deduction.

Employees can claim cents per km deductions if they are not reimbursed by their employer for business-related driving.
Sole traders and partnerships (where at least one party is an individual) can claim cents per km tax deductions

Regardless of your employment situation, you can only use the cents per km method to claim tax deductions for cars. Cars are defined by the ATO as motor vehicles that can carry no more than a tonne of load and no more than 9 passengers. Note that motorcycles are not considered cars for the purpose of ATO tax deductions.

If you use another type of vehicle for business purposes, have a different employment situation, or want to claim more than 5000 kilometres a year you can claim km tax deductions through other methods.

Learn more about how to claim deductions for business driving in our

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How does the cents per km tax deduction work?

The Australian Tax Office publishes an update cents per km rate each year. The rate is meant to cover all expenses of running your car for business-related purposes. Use the cents per km rate to calculate the tax deduction you can claim for the year. You can do so by multiplying your business-related kilometres with the corresponding year’s rate.

When you claim your cents per km tax deduction, you don’t need to provide evidence of how many kilometres you’ve driven. However, this doesn’t mind you don’t need to keep records. The ATO may ask you to see how you’ve calculated your claim or you might be audited. You should still record information about each trip with the following details:

The number of kilometres driven for business and personal purposes.
Details of how you calculated your claim.

If you use another tax deduction method, you might have to keep additional records.

Learn more about claiming cents per km tax deductions and other methods in our ATO guide.

FAQ

How many kms can you claim without logbook ATO?

You can claim up to 5000 kilometres with the cents per km method if you have decided not to use the ATO logbook method.

Are cents per km taxable?

The cents per km deduction you receive from the ATO is not taxable. If you receive a cents per km reimbursement from your employer, it will not be taxed so long as it doesn’t exceed the rate set by the ATO.

Can I claim cents per km and depreciation?

If you use the cents per km method to claim car-related business expenses, you are not able to claim depreciation separately. The cents per kilometre rate is meant to cover all costs of owning and driving your vehicle for business purposes.