Logbook Method vs Cents per Kilometre: Which Actually Saves You More Tax?

If you use your car for work, the ATO lets you claim a deduction using one of two methods: cents per kilometre, or the logbook method. They can produce very different results, and picking the wrong one is one of the simplest ways to under-claim at tax time.

Cents per kilometre, in short

You multiply your work-related kilometres by a fixed rate the ATO sets each year (currently 88 cents per kilometre for 2025-26). It's capped at 5,000 km per car per year, so the maximum claim under this method is a little over $4,000. You don't need receipts, but you do need a reasonable, defensible way to show how you calculated your work kilometres - a diary or a trip log, not a guess at year-end.

The logbook method, in short

You keep a logbook for 12 continuous weeks that's representative of your travel throughout the year, recording every trip - date, odometer readings, purpose, business or private. That 12-week sample gives you a business-use percentage, which you then apply to your actual running costs for the full year: fuel, insurance, registration, servicing, interest and depreciation. There's no kilometre cap, and a valid logbook can be used for up to five years, as long as your travel pattern doesn't materially change.

Which one wins?

If your work-related driving is genuinely light - well under 5,000 km a year - cents per kilometre is simple and requires almost no admin. But for most people who drive regularly for work, especially in a newer or more expensive vehicle, the logbook method comes out well ahead, because it captures the full cost of running the car rather than a flat per-kilometre estimate. The trade-off is the 12-week logging effort and the need to keep receipts for actual costs. You're not locked in either - you can choose a different method each financial year based on which one suits you best, as long as you meet that method's record-keeping requirements.

The real cost of getting this wrong

The most common mistake isn't picking the wrong method - it's not having the records to back up whichever one you picked. Cents-per-km claims near the 5,000 km cap are one of the most heavily scrutinised deductions precisely because they're easy to overstate and hard to verify after the fact. A logbook that's reconstructed from memory in June, rather than logged as trips actually happen, generally won't hold up if it's ever reviewed.

How Odomly helps either way

Whichever method suits you, the deduction is only as good as the record behind it. Odomly lets you log every trip in seconds with a photo-verified odometer reading, so your 12-week logbook - or your cents-per-km diary - is built automatically from real trips instead of an end-of-year reconstruction. When it's time to lodge, Odomly generates an ATO-compliant report using whichever method fits your situation, with the underlying trip data and photos to back it up.

This article is general information, not tax advice. Your situation may differ - check the current rates and rules at ato.gov.au or speak with a registered tax agent before lodging.