Claiming car expenses as a tax deduction is made simple by using the cents per kilometre method. Removing the stress of tracking every expense you incur on your car frees up your time to do more important things in life.
If you are looking to make claiming car expenses on your tax return easier, this blog is for you. In this article, we will discuss the cents per kilometre method, what vehicles are eligible, what car expenses can and can’t be claimed under the method, and the pros and cons of using the cents per kilometre method. There’s even a cents per km calculator to check out the amount of your tax deduction.
What is the ATO cents per kilometre method?
Using the cents per kilometre method, you can claim up to 5,000kms annually for work-related use of your car. The cents per km method uses a flat rate that is multiplied by the number of kilometres you have travelled for a given year. The ATO cents per km 2024 rate is 85 cents. The ATO cents per km rate 2025 is 88 cents.
For example, you have used your car for work in 2024 and travelled 4,500km. Under the cents per km method, you multiply 4,500km by 85c. That means you can claim $3,825 (4,500km x 85c) on your tax return as a car expenses tax deduction. The equation is so easy, that you do not require a cents per km calculator!
The 5,000km are calculated per vehicle. If you jointly own a car with someone and use it for various income-generating activities, you can deduct 5,000km each.
Here is the ATO cents per km 2025 and 2024 rate as well as previous years:
| Year | ATO km rate |
| FY24-25 | 88 cents |
| FY23-24 | 85 cents |
| FY22-23 | 78 cents |
| FY20-21, 21-22 | 72 cents |
| FY18-19, 19-20 | 68 cents |
| FY15-16, 16-17, 17-18 | 66 cents |
Cents per km reimbursement rate for employees
Most employers reimburse their employees by paying an allowance equal to the cents per km rate for the financial year. This is reportable on the group certificate (annual payment summary) that your employer submits to the ATO. The cents per km reimbursement rate for employees shows up as an allowance on your group certificate.
You will need to claim a tax deduction for the cents per km reimbursement to ensure that you are not taxed on this at the time of lodging your online tax return.
Cents per km calculator
Use this cents per km calculator to check you tax deduction. You can also this as a cents per km reimbursement calculator to check your employer is reimbursing you correctly.
To use this cent per km calculator, select the financial year you are calculating and enter in the number of kms you have travelled or expect to travel – remember this maxes out at 5,000 kms. You can then see the expected tax deduction for the cents per km method.
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What vehicles are eligible for the cents per kilometre method?
Now we understand what the cents per km method is, but what cars are eligible to claim the deduction?
Vehicles you can claim under the cents per km method:
- Cars that carry a load of less than one tonne and carry fewer than 9 passengers.
Vehicles you cannot claim under the cents per km method:
- Motorcycles
- Vehicles that carry more than one tonne (like certain trucks)
- Vehicles that hold more than 9 passengers (buses and certain vans)
Work related car expenses – What can and can’t you claim
Understanding what expenses, you can and can’t claim on your car is important.
Car expenses can only be claimed if they are used for work duties such as the following:
- Travelling to places that are not your regular workplace (client’s house, delivering or collecting supplies)
- Your employer requires you to start work at home, and then travel to your workplace
- You have no fixed workplace (travel from site to site)
- You carry equipment for work that can’t be securely stored at your workplace
Car expenses cannot be claimed for the following reasons:
- Travelling to and from your regular place of work
- Your employer pays for your car expenses
- You salary sacrifice or have a novated lease on your car
What are the pros and cons of using the cents per km method?
The cents per km method for claiming car expenses has its advantages and disadvantages. Let’s explore some of the pros and cons of the method:
Pros:
- Simple to use: The cents per km method is easy to track as it only requires you to record how many kilometres you have travelled. Other methods require you to record the cost of different expenses.
- No need for receipts: The only thing you are required to track is how far you have travelled as the expenses are accounted for under the cents per kilometre method. That means you do not need to keep receipts.
- Saves you time: When tax time arrives, you do not need to gather and organise your receipts. This saves you time and effort as you only need to look at the number of kilometres you have logged.
Cons:
- Limited to 5,000km: The cents per kilometre method is capped at 5,000km. This means any distance you travel over the cap will not be accounted for.
- Does not consider actual costs: The method does not consider the actual expenses you incur. That means you may be missing potential tax savings.
- Not suitable for all situations: The method may not be suitable for people who incur high expenses or use their car for personal and work reasons. Other methods such as the ATO logbook method or actual cost method may be more beneficial. Learn more about other car expense methods, here.
In summary, the cents per kilometre method is easy to use and saves people time. The method has its faults as it does not consider all actual expenses incurred, and can only be used for claiming 5,000km of travel. Cars that carry less than 9 passengers and under a tonne can be used for the method. Expenses can only be claimed if the car is used for work related car expenses. There is no need for a cents per km calculator as the calculation is simply, the number of kilometres travelled multiplied by the ATO km rate of 85c. For example, if you travelled 4,000km, you could claim $3,400 (4,000km x 85c).
We can assist you with your taxes and more!
Need help to claim your work-related car expenses? One Click Life allows you to complete your online tax return at the click of a button. The simplest way to complete your tax return is to use an online tax agent. Why wouldn’t you use one if you could claim your tax agent fees as a deduction on your online tax return? We take care of more than just tax! You can enjoy the important things in life by letting One Click Life take care of your mortgage, health insurance, and will.