If you’re a sole trader using your car for work, the cents per kilometre method is hands-down the easiest way to claim vehicle expenses. No fuss, just a simple calculation that gets you tax relief without the headache.
Here’s everything you need to know about claiming vehicle expenses using the cents per km method.
What is the cents per kilometre method?
The cents per kilometre method is one of the simplest ways to claim vehicle expenses as a sole trader.
Instead of tracking every single receipt for petrol, maintenance, and insurance, you just multiply the number of business kilometres you’ve travelled by the ATO’s set rate for that financial year. Easy as!
You can claim up to 5,000 business kilometres per car each financial year, and while you don’t need to keep a logbook, you should have some way to show the ATO how you worked out your business kilometres – like diary records or trip notes.
What’s covered by the cents per kilometre method?
The beauty of the cents per kilometre method is that it covers pretty much all expenses related to running your car.
The rate (as set by the ATO) already includes:
- Petrol
- Maintenance and repairs
- Registration
- Insurance
- Depreciation
Basically, all your car running costs are rolled into that single per-kilometre rate. Simple!
That in mind, there are a few limitations:
Kilometre limit
You can only claim up to 5,000 kilometres per car each financial year. At the current rate ($0.88 per kilometre), that’s a maximum deduction of $4,400.
Remember, you can only claim kilometres when you use your car for business trips. Personal trips don’t count!
Car ownership
To claim using this method, you generally need to own or lease the car. It won’t apply if your vehicle actually belongs to old mate Jim, and you just borrow it from time to time.
(If you are using old mate Jim’s ute, you may still be able to claim running expenses, but you’ll need to use the actual costs method instead.)
Cars only
The cents per kilometre method only applies to vehicles classified as “cars” by the ATO, and they’re very specific about what does and doesn’t count.
A car can’t carry more than 1 tonne, or seat more than 8 passengers (excluding the driver). Motorcycles and larger vehicles don’t qualify for the cents per km method.
💡For more on claiming vehicle expenses, including the logbook method and the actual costs method, check out our article on vehicle expenses for sole traders.
What you can’t claim when using the cents per kilometre method
Here’s the important bit: because the cents per kilometre rate already includes all your car expenses, you can’t double-dip.
That means if you’re using the cents per km method, you can’t claim:
- Individual fuel receipts
- Separate insurance costs
- Registration fees
- Maintenance and repair bills
- Depreciation on your vehicle purchase
It’s all bundled into that per-kilometre rate already!
Like with other vehicle expense claiming methods, you also can’t claim fines, parking tickets, or towing fees. Even if you cop them while working, they’re not tax deductible. Sorry!
Cents per km rates
Rates can change, so it’s always worth checking the ATO website for the current rate for the year you’re claiming.
Cents per km rate 2025
For the 2024/25 financial year (1 July 2024 to 30 June 2025), the cents per kilometre rate is $0.88 per kilometre.
This rate applies to all business kilometres you travel, up to that 5,000km maximum.
Cents per km rate 2024
For the 2023/24 financial year (1 July 2023 to 30 June 2024), the rate was set at $0.85 per kilometre.
Need an easy way to track your kilometres? Use Mileage by Hnry!
Mileage by Hnry is an app that automates the process of tracking, well, miles.
It’s completely free for all Hnry users, and for those yet to join Hnry, it’s a minimal monthly subscription of $4.99 monthly or $55 a year – which is totally worth it when you think about how much you could save on your final tax bill.
But using Mileage with Hnry is where the real magic happens. You’ll be able to raise vehicle expenses that are completely compliant with ATO requirements, in just a few clicks.
So, what are you waiting for? Try Mileage by Hnry today!
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