Logbook method vs cents per km — which car deduction method is better in Australia?

There are two methods for claiming work-related car expenses in Australia, and which is better depends on how much you drive for work and the running costs of your vehicle.

Cents per kilometre method: You claim a flat rate of 85 cents per kilometre for the 2024-25 income year (up from 78 cents in 2022-23), for a maximum of 5,000 kilometres per year per car. The maximum claim is therefore A$4,250. No receipts are required — you just need to be able to show how you calculated the business kilometres (a diary or logbook entry is recommended). This method is simple and suits people with lower work-related driving.

Logbook method: You keep a logbook for at least 12 continuous weeks that records every trip (date, destination, purpose, odometer start and end). The logbook establishes your business use percentage. You can then claim that percentage of all actual running costs — fuel, insurance, registration, loan interest, depreciation, repairs, and servicing. A logbook is valid for 5 years before you need to redo it (unless your work pattern changes significantly).

Which is better? The logbook method is almost always better if your business use percentage is above roughly 30% and you drive more than 5,000km per year for work. A high-cost vehicle (e.g. a large ute with high fuel costs) makes the logbook even more advantageous. Do a quick calculation both ways: if the logbook percentage of your actual costs exceeds A$4,250, keep the logbook. Note that the cents per km method already accounts for depreciation, so you cannot separately claim depreciation under that method.