Car Expenses 2025 – Logbook vs Cents-per-Kilometre: Which Pays More?

Updated: 09/09/25 • Reviewed by: GoTax Registered Tax Agent

If you use your car for work, you can claim it at tax time. In 2025, the ATO gives you two methods: logbook or cents-per-kilometre. The right choice could save you hundreds. Here’s how each method works, which one pays more, and how to avoid audit traps.

Stop Guessing Your Car Claims

Every year, Aussies drive thousands of kilometres for work: visiting clients, lugging tools, dashing between job sites. But at tax time, many guess their car claims and end up under-claiming — or worse, making dodgy claims that the ATO loves to smack down.

Claiming car expenses isn’t about luck. It’s about choosing the right method for your work style — logbook or cents-per-kilometre. Get it right, and your refund could jump.

Method 1: The Cents-per-Kilometre Method (Simple but Limited)

• Claim 85 cents per kilometre (2025 rate).

• Maximum of 5,000 work kilometres.

• No receipts needed — but you need a record of how you worked out the distance.

Example:
Mick, a rideshare driver, logs 4,000km of business trips. He claims:
4,000 × $0.85 = $3,400 deduction.

Method 2: The Logbook Method (Detailed but Bigger Payoff)

• Keep a 12-week logbook showing work vs personal use.

• Apply that percentage to all car running costs (fuel, rego, insurance, servicing, tyres, depreciation).

• Logbook lasts 5 years if your usage pattern stays the same.

Example:
Jade, a consultant, keeps a logbook showing 60% business use. Her annual car costs:

• Fuel = $3,200

• Insurance = $1,200

• Servicing = $1,000

• Rego = $900

• Depreciation = $2,500

Total = $8,800 × 60% = $5,280 deduction.

Which One Pays More?

The logbook almost always pays more for high-use workers, but the cents-per-kilometre method is easier for low-use workers.

Gotax Warning – Don’t Claim Commutes

The ATO’s golden rule: home to work is commuting, not claimable.

• Driving from home to your office:  ... Not deductible.

• Driving from home to a client site: ... Deductible.

• Driving between job sites: ... Deductible.

Get this wrong, and you’ll be waving at an audit.

The Top 5 Mistakes People Make with Car Claims

1. Claiming the whole rego/insurance without a logbook.

2. Forgetting depreciation on cars over $300.

3. Claiming commuting to your regular workplace.

4. Not updating logbooks when work patterns change.

5. Thinking the 5,000km cap is a “free pass” without proof.

Gotax Audit Story

Sam, a sparky, claimed 5,000km using cents-per-kilometre but had no record of how he worked it out. The ATO cut his claim down to 1,000km — refund slashed.

Compare that to Mia, who kept a logbook and fuel receipts. Her logbook showed 65% business use, and she claimed $7,200. The ATO let it through without a fuss.

Tools to Make It Easy

• Deduction Grabber – snap fuel, service, and tyre receipts.

• eCashBooks (www.ecashbooks.com.au) – track costs and logbook entries digitally.

• GoTax Online – prompts you to choose the method that gives you the best return.

FAQs – Car Expenses 2025 (12 Questions)

1. Do I need a logbook to claim car expenses?
   Only if you want to claim actual running costs. For cents-per-km, you don’t.

2. What’s the cents-per-km rate in 2025?
   85 cents per km, capped at 5,000km.

3. Can I claim both methods?
   No — you pick one method per car per year.

4. Is home-to-work deductible?
   No. Only business-related trips beyond your regular commute.

5. How long does a logbook last?
   5 years, unless your work pattern changes.

6. Do electric cars get the same deductions?
   Yes — fuel costs swap for charging costs.

7. Can I claim loan repayments?
   No. Only interest on the loan is deductible, not the principal.

8. What if I drive for rideshare?
   A logbook almost always gives you a bigger claim than cents-per-km.

9. Can I estimate the kilometres?
   No. You need reasonable records — diary, log, or app.

10. Can I use apps for logbooks?
    Yes. ATO accepts digital logbooks if they meet requirements.

11. What if my employer reimburses fuel?
    You can’t double dip — only claim what you pay yourself.

12. Do motorbikes qualify?
    No. Car expenses apply only to vehicles under 1 tonne carrying <9 passengers.

Related Reading

• Vehicle logbooks explained: https://www.gotax.com.au/blog/need-help-with-vehicle-logbooks-heres-how-to-get-it-right

• Claiming car expenses 2025: https://www.gotax.com.au/blog/claim-car-expenses-2025

• Essential tax records: https://www.gotax.com.au/blog/essential-tax-records-what-to-keep

More resources in the GoTax Online Library: https://www.gotax.com.au/blog

Quick Checklist

Decide logbook or cents-per-km
Keep receipts (fuel, servicing, insurance)
Track kms or keep logbook for 12 weeks
Don’t claim commuting
Store records for 5 years

What Next?

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