Car Expense Deduction Calculator (Australia)

What the car expense deduction calculator does

The car expense deduction calculator compares the two methods the ATO allows for claiming work-related car expenses in Australia and shows which one leaves you better off. You enter your business kilometres, your total running costs for the year and your logbook business-use percentage, and the tool returns the deduction under the cents-per-kilometre method, the deduction under the logbook method, the difference between them, and an estimate of the tax the larger claim saves at your marginal rate.

Car expenses are one of the biggest work-related deductions claimed in Australia and one of the most closely reviewed. Choosing the right method, and being able to back it up, is worth real money at tax time.

The two methods, side by side

The cents-per-kilometre method is the simple one. You multiply the business kilometres you travelled by a set rate the ATO publishes each year, up to an annual cap per car. That rate is designed to cover everything: fuel, servicing, tyres, registration, insurance and the car's decline in value, all rolled into one figure. You do not need receipts for the running costs, but you do need to be able to show how you worked out the kilometres, a diary, a roster, an app, or a pattern of regular trips.

The logbook method is the detailed one. You keep a logbook for a continuous twelve-week period that is representative of your year, which establishes your business-use percentage. You then total the actual costs of running the car for the whole year and claim that percentage of them, plus the same percentage of the car's decline in value. There is no kilometre cap, so the more you drive for work, the more the method is worth.

For someone driving 4,000 business kilometres with A$9,000 of running costs and 60% business use, the cents-per-kilometre method gives about A$3,640 while the logbook gives A$5,400, a difference of roughly A$1,760 in deduction, or several hundred dollars of tax.

How the calculation works

The tool follows the same steps the ATO does:

• It caps your business kilometres at the annual limit and multiplies the claimable kilometres by the published rate to get the cents-per-kilometre deduction.
• It adds the car's decline in value to your total running costs and multiplies by the business-use percentage to get the logbook deduction.
• It takes the larger of the two as the best deduction and reports the gap between them.
• It applies your marginal rate, including the Medicare levy, to estimate the tax saved.

Note that decline in value is added only to the logbook side. The cents-per-kilometre rate already includes depreciation, so adding it again would double-count.

The kilometre cap and who it affects

The cap is the single feature that decides the method for most people. Under the cents-per-kilometre method you can claim only up to a set number of business kilometres per car per financial year. Drive fewer than that and the method is a genuinely easy way to make a fair claim. Drive more and every additional kilometre is worth nothing under that method, while the logbook keeps counting.

The tool shows the kilometres above the cap separately for exactly this reason. If that number is large, a logbook is almost certainly worth the twelve weeks of effort. The cap applies per car, so if you used two cars for work you assess each one on its own.

What you can and cannot claim

Business kilometres are trips you make in the course of doing your job. Travelling between two separate workplaces, driving to a client, a supplier or a training course, and carrying bulky tools you genuinely cannot leave at work all qualify. Home-to-work travel does not, in almost all cases, even if you live a long way from the office, work irregular hours, or stop briefly on the way.

Under the logbook method, running costs include fuel, oil, servicing, repairs, tyres, registration, insurance, and the interest component of a car loan or lease. They do not include fines, private tolls and parking, or the capital cost of the car itself, that is claimed through decline in value instead. If your employer reimburses a cost, you cannot claim it.

A practical point on records: the ATO expects evidence. For the logbook method that means the twelve-week logbook, odometer readings at each year end, and receipts. For cents per kilometre it means a defensible basis for the number of kilometres. An estimate that happens to land exactly on the cap every year attracts attention.

Reading your result

The output shows both methods, the better of the two, and the gap between them. Where the logbook advantage is negative, the cents-per-kilometre method is ahead, which typically happens when business use is low or running costs are modest. The chart puts the two figures side by side so the choice is obvious at a glance.

The tax saving is an estimate. It applies the marginal rate for the taxable income you entered, including the Medicare levy, to the larger deduction. Your real benefit depends on your full return, other deductions and any offsets, so treat the figure as a guide to the size of the prize rather than a precise refund.

When to use this tool

This calculator is helpful when you want to:

• Decide whether keeping a logbook is worth the effort this year.
• Compare both methods before lodging your return.
• See how many of your business kilometres fall above the cap.
• Estimate the tax benefit of a work-car claim at your marginal rate.

Run it at the start of the year as well as the end. If the logbook method looks clearly better, starting a twelve-week logbook early is the difference between claiming it and missing it. Confirm your entitlement and your records with a registered tax agent before you lodge.

This is general information only and not financial advice.

About This Car Expense Deduction Calculator

Use this car expense deduction calculator to get an instant, accurate estimate. The figures follow official ATO guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.