Choosing between the Logbook method and Cents Per Kilometre method can be a headache. But don’t worry, because we’re about to break down the two main methods for claiming tax back on those precious kilometres. Whether you’re a seasoned road warrior or just starting to rack up those business kilometres, understanding these options can make a big difference in your tax return. Plus, we’ll show you how GOFAR, the ultimate mileage tracking app, can turbocharge your tax refund and keep the ATO happy at the same time. Let’s hit the road and find out which method is best for you in 2025! The Cents Per Kilometre Method How it works The Cents Per Kilometre method is a simple way to claim work-related car expenses at tax time. For the 2025 tax year, you can claim up to 5,000 business kilometres per car at a rate of 88 cents per kilometre. This method is best suited for people who drive occasionally for work — like trips to client meetings, site visits, or conferences. Calculating Your Deduction To calculate your claim, total up your business kilometres (capped at 5,000), then multiply that number by 88 cents. For example, if you travelled 3,000 business kilometres, your deduction would be $2,640. Remember, trips between your home and regular workplace usually can’t be claimed. Only travel that is directly work-related is eligible. Record-Keeping Requirements While this method doesn’t require a formal logbook or fuel receipts, record keeping is still essential. According to the ATO, you must be able to show: That you own or lease the car How you calculated your business kilometres You don’t need to keep a logbook, but you must be able to show how you worked out your business kilometres (for example, calendar or diary records. You can also track trips using tools like GOFAR. Limitations You’re capped at 5,000 km per year if you use the cents per kilometre method. If you’re a frequent driver or not sure how much you’ll travel for work, the logbook method might give you a more accurate (and potentially higher) deduction. The Logbook Method How it Works The Logbook method is ideal for people who drive a lot for work — think sales reps, tradies, or anyone racking up serious kilometres. Unlike the Cents Per Kilometre method, there’s no 5,000 km cap. You can claim a percentage of all your actual car expenses based on how much you use your car for business. This includes: Fuel Servicing and repairs Insurance Registration Depreciation Lease payments (if applicable) To use this method, you’ll need to keep a logbook for 12 continuous weeks. During that time, you must record every single trip — including the date, start and end time, distance travelled, and reason for the trip (business or personal). At the end of the 12 weeks, you calculate the percentage of your total driving that was for business. That percentage is then used to determine how much of your total annual car expenses you can claim. Maximising Your Claim The smart move? Choose your 12-week period wisely. If you know you have a busy work period coming up — for example, a new client rollout or peak season — log your trips during that time. A higher percentage of business use = a bigger tax deduction. Once you’ve completed your 12-week logbook, it’s valid for up to five years, as long as your business usage doesn’t significantly change. Yes, it’s more detailed than the cents per km method, but the tax savings can be well worth it. According to the ATO, you must keep: A logbook covering at least 12 continuous weeks Odometer readings at the start and end of each trip Receipts and tax invoices for all car expenses you’re claiming You also need to record the opening and closing odometer readings for the income year to calculate your total kilometres driven. Pro tip: apps like GOFAR can automate most of this for you — tracking every trip, tagging business use, and storing your logbook data securely. Limitations The main downside? It takes more effort. If you only drive occasionally for work, the logbook method might not be worth the admin. But if you use your car regularly for business, this method typically results in a much larger deduction than the flat-rate approach. Comparing the Pros and Cons of Each Method Cents Per Kilometre Method – under 5,000km per year This method is easiest or those that don’t rack up a lot of kilometres for work. It’s simpler, requiring minimal record-keeping. You can claim up to 5,000 km annually, and while you won’t need to keep a detailed logbook you will still need to keep records of the trips claimed. However, it caps your claim, potentially leaving money on the table for high-mileage drivers. Logbook Method – over 5,000km per year Doing more than 5000km? The logbook method shines! It allows claims for all work-related driving without the cap leading to larger deductions for most people. With it you can claim on all your vehicle costs: depreciation, interest on finance, servicing, insurance, fuel, etc. The downside? It’s more time-consuming, requiring meticulous record-keeping. But remember, products like GOFAR automate the entire process, making even the detailed logbook method a breeze. Real Life Examples Cents per Kilometre Method in Action – under 5,000km per year Let’s say you’ve driven 10,000 km for work this year. With the ATO’s 2025 rate of $0.88 per kilometre, your deduction would be capped at $4,400 (5,000 x $0.88). Why? Because this method has a limit—you can only claim up to 5,000 km per year. It’s straightforward, but it doesn’t account for any additional work travel over the cap, leaving potential deductions on the table. Logbook Method in Action – over 5,000km per year Now imagine you’ve tracked your work-related travel using a logbook and driven 10,000 km for work. This represents 50% of your total annual driving (if your total mileage is 20,000 km). Let’s say your car expenses (fuel, insurance, registration, maintenance, and depreciation) total $12,000 for the year. Using the logbook method, you could claim $6,000 (50% of $12,000). The logbook method not only allows you to claim beyond the 5,000 km cap but also considers the real costs of running your car—making it ideal for high-mileage drivers. But remember, products like GOFAR automate the entire process, making even the detailed logbook method a breeze. Choosing the Right Method For You When it comes to claiming vehicle expenses, the ATO gives you the freedom to choose between the logbook and cents per kilometre methods. The best part? You’re not locked in forever. You can switch methods from year to year, allowing you to maximise your tax deductions. Why the Logbook Method Often Wins While both methods have their merits, the logbook method typically offers a bigger tax break. Here’s why: It allows you to claim all your actual car related expenses, not just a fixed rate. You can claim all your business kilometres, rather than being capped at 5,000km. It’s more accurate, reflecting your actual costs Keeping Your Options Open The key to flexibility is good record-keeping. By maintaining detailed logs of your trips and expenses, you’ll have the data you need to choose the most advantageous method each year. This is where products like GOFAR can be a game-changer, automatically tracking your trips and categorising them for easy reporting. How GOFAR Helps You Claim Bigger Tax Deductions Simplifying Your ATO Logbook GOFAR is your secret weapon for maximising tax returns on work-related driving. This nifty device plugs directly into your car’s computer, automatically tracking every trip and syncing the data to your smartphone app. No more guesswork or manual calculations—just plug in your GOFAR device and drive! Effortless Expense Tracking With GOFAR, you’re not just logging kilometres. The system captures all your car expenses, including fuel costs and more. This comprehensive approach ensures you’re claiming every possible deduction. One-Click ATO Compliance When tax time rolls around, GOFAR’s got your back. With just one click, you can export an ATO-compliant logbook. But here’s the real magic: GOFAR analyses your data to identify the most advantageous 12-week period for your claim. This smart feature could potentially boost your tax return significantly. By automating the tedious parts of expense tracking, GOFAR lets you focus on your work while ensuring you get the maximum tax benefit from your business driving. FAQ: Commonly Asked Questions About Mileage Tracking What if I use my car for both personal and business purposes? No worries! You can still claim deductions for business-related travel. With the logbook method, you’ll record all trips and calculate the business-use percentage. For the cents-per-km method, you’ll only count business kilometres. Do I need to keep receipts for fuel and maintenance? For the cents-per-km method, you don’t need receipts. However, for the logbook method, it’s necessary to keep all car-related expense records. This includes fuel, repairs, registration, and insurance. Can I switch between methods each year? Absolutely! You can choose the method that benefits you most each tax year. Just remember, you can’t use both methods for the same car in the same year. How does GOFAR make mileage tracking easier? GOFAR’s automatic trip logging takes the hassle out of record-keeping. It accurately tracks your journeys, categorises them, and even generates ATO-compliant reports. This means less time on paperwork and more confidence in your tax claims.