ATO cents per km rate 2026-27: 91c per business km
The ATO cents per km rate for the 2026-27 income year (1 July 2026 to 30 June 2027) is 91c per business kilometre, set by the Commissioner's determination F2026L00785. Your claim is capped at 5,000 business km per car, which puts the maximum at $4,550 per car. In 2024-25 and 2025-26 the rate was 88c, and electric and petrol cars use the same rate.
Where the 91c rate comes from
Section 28-25 of the Income Tax Assessment Act 1997 lets the Commissioner of Taxation set the cents per km rate for each income year. According to the explanatory statement of F2026L00785, the 88c rate of 2024-25 and 2025-26 was indexed by the private motoring sub-group of the Consumer Price Index (factor 1.009), giving a base of 89c. A one-off 2c uplift was then added for fuel price movements in the March 2026 quarter, for a total of 91c. This uplift applies to the 2026-27 income year only. From 2027-28 the rate will index the 89c base, and a new determination is expected around June 2027.
How to calculate your cents per km claim
Multiply the business kilometres of each car in the income year, up to 5,000, by the rate of that year. A sole trader who drove a Tesla 3,140 business km in 2026-27 claims 3,140 x $0.91 = $2,857.40. At 6,200 business km the cap applies: 5,000 x $0.91 = $4,550.00. Kilometres belong to the income year in which you drove them, so trips from January to June 2026 fall in 2025-26 and use 88c; trips from 1 July 2026 use 91c. No receipts are needed. You must still be able to show how you worked out your business kilometres, for example with a diary or trip records, and the ATO accepts a reasonable estimate. Normal travel between home and your usual workplace is private and does not count, except in limited cases.
Rate history since 2016-17
For 2016-17 and 2017-18 the rate was 66c (F2016L01157). It rose to 68c for 2018-19 and 2019-20 (F2018L01023), then to 72c for 2020-21 and 2021-22 (F2020L00676). In 2022-23 it reached 78c (F2022L00813), and 85c in 2023-24 (F2023L00767). Determination F2024L00697 set 88c, which applied in 2024-25 and 2025-26. If you amend an earlier return, apply the rate of the income year you are amending to the kilometres of that year.
Who can use the cents per km method
Sole traders, employees and partnerships with at least one individual partner can use the method for a car they own or lease, hire purchase included. Companies and trusts cannot use it. A car under a novated lease or a salary sacrifice arrangement does not qualify either, because the employee does not own or lease it; private use of such a car falls under fringe benefits tax. You choose the method per car for a whole income year, and you can change it from one year to the next. Joint owners who use the car for separate income-producing purposes can each claim up to 5,000 km.
When the logbook method pays more
Business kilometres above 5,000 add nothing under the cents per km method. The rate also covers every running cost and decline in value, so electricity, servicing and depreciation cannot be claimed on top. With a valid logbook kept for at least 12 continuous weeks, you can instead claim your business-use percentage of all actual car expenses, with receipts. Decline in value is then worked out on a cost capped at the car limit, $69,883 for a car first used or leased in 2026-27. For a Tesla driven heavily for work, compare both methods each year before you lodge.
Car allowances paid by an employer
An employer paying a cents per km allowance for an employee's own car withholds no PAYG tax on the part paid at or below the ATO rate, for up to 5,000 business km in the income year. Kilometres above 5,000, and any part of the rate above the ATO rate, are subject to withholding. For 2026-27, an allowance of 95c per km for 6,000 km comes to $5,700: $4,550 is paid without withholding and $1,150 is subject to withholding. The whole allowance is assessable income for the employee and appears on the income statement. Employees then claim their own deduction with the cents per km or logbook method.
Sources
- Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2026 (F2026L00785) Federal Register of Legislation
- Explanatory statement to F2026L00785 (89c base and 2c one-off uplift) Federal Register of Legislation
- Cents per kilometre determination 2024 (F2024L00697): 88c for 2024-25 and 2025-26 Federal Register of Legislation
- Cents per kilometre method (individuals), updated 12 August 2026 Australian Taxation Office
- Cents per kilometre method (businesses), updated 27 May 2026 Australian Taxation Office
- Car thresholds from 1 July, published 9 June 2026 Australian Taxation Office
- Withholding for allowances, updated 26 August 2026 Australian Taxation Office
FAQ
Is the cents per km rate different for an electric car?+
No. The 91c rate for 2026-27 applies to every car, electric or not, and it already covers electricity. Home charging costs cannot be added on top of a cents per km claim.
Can I claim 5,000 km for each of my cars?+
Yes. The cap applies per car and per income year, so two eligible cars can each reach 5,000 business km, or $4,550 each in 2026-27. Each car needs its own record of business kilometres.
Will the rate stay at 91c in 2027-28?+
Not necessarily. The 2c fuel uplift applies to 2026-27 only, so the 2027-28 rate will start from the 89c base, indexed. A new determination is expected around June 2027.
Can I use cents per km for a novated lease car?+
No. The method requires a car you own or lease, and a car under a novated lease or salary sacrifice arrangement is not owned or leased by the employee. Its private use is handled through fringe benefits tax.
The cents per km method only needs a sound record of your business kilometres for each car and each income year. Odoproof captures every Tesla trip automatically, so that record stays contemporaneous. Start your 7-day free trial today.
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