ATO Cents-per-km Rate 2026-27: 91¢/km, 5,000 km Cap
The Australian Taxation Office's cents-per-km rate for the 2026-27 financial year (1 July 2026 to 30 June 2027) is 91 cents per business kilometre, up from 88 cents in 2025-26. The method is capped at 5,000 business kilometres per car per year, making the maximum deduction $4,550 per car. Beyond that ceiling, drivers must switch to the logbook method to claim more.
How the 5,000 km cap works at 91¢
The cap is per car, per financial year, per driver. If you drive two cars for business in the same year, each gets its own 5,000 km allowance. At 91 cents, the maximum cents-per-km deduction is 5,000 × $0.91 = $4,550 per car (so up to $9,100 total for two cars).
Once a single car passes 5,000 business kilometres in a financial year, every additional kilometre cannot be claimed under the cents-per-km method. The remaining option is the logbook method, which requires a 12-week representative logbook and has no kilometre cap.
Who can use cents-per-km
Sole traders, employees claiming work-related car expenses, and partners in partnerships using their personal car for business. The cents-per-km method is the simpler of the two ATO-approved methods.
Cents-per-km does not require receipts for fuel, maintenance, or insurance. The 91-cent rate is meant to cover all operating costs of running a personal vehicle for business.
When the logbook method wins
If your annual business driving exceeds 5,000 km, the logbook method has no cap and often produces a larger deduction for high-mileage drivers.
If your actual per-km costs (fuel, insurance, depreciation, maintenance) exceed 91 cents, the logbook method lets you claim more than the flat rate.
FAQ
Does the 5,000 km cap reset each year?
Yes. The cap is per financial year (1 July to 30 June). On 1 July 2026 the new 5,000 km cap for 2026-27 began at the 91-cent rate.
What was the 2025-26 rate?
88 cents per km, capped at 5,000 km ($4,400 maximum). The 2026-27 increase to 91 cents raises the maximum deduction to $4,550 per car.
Can I switch between cents-per-km and logbook year to year?
Yes. Each financial year is independent. You can use cents-per-km in one year and logbook in the next, depending on which is more advantageous for your driving pattern.
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