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ATO Cents per km Rate 2024-25
10 April 2024 - 2 min read

ATO cents per km rate 2024-25

The 2023-24 tax year is ending in just two months, and we expect the ATO to soon announce the cents per km rate for 2024-25. The ATO usually announces the revised per km rate at the end of June. Once the newly confirmed rate from the ATO is out, we will share it immediately in this article.

The 2023-24 cents per km rate that still applies until 30 June 2024 is $0.85 cents per business kilometre.

Tax year Cents per km rate
2024-25 Not yet announced
2023-34 $0.85 per kilometre

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Will the cents per km rate increase for 2024-25?

When revising the cents per km rate, the ATO considers the fixed and variable costs of running a vehicle each year. Australia has seen volatile fuel prices during the second part of 2023 and the beginning of 2024. Still, many other costs also influence the rate, including vehicle depreciation, road taxes, insurance, and repair costs.

The ATO has increased the per km rate each year in the past three years, making it likely they continue this trend in the upcoming tax year.

How the rate applies to you depending on your employment situation

If you are a sole trader or in a partnership

You can use the upcoming cents per km rate to claim a tax deduction for up to 5,000 business kilometres you’ve driven throughout the 2024-25 tax year. However, you won’t be able to claim other vehicle expenses, as the rate covers all your vehicle costs, including depreciation.

The ATO doesn't require written evidence when you claim business kilometres using the cents per km method, but they may ask you to show how you worked out your business kilometres, so we recommend keeping a log book. Find out the specific tax rules you need to follow when claiming business kilometres in our guide for self-employed people who claim car expense deductions.

If you are an employee

You can receive reimbursement for your business kilometres from your employer. While it’s common to use the official ATO rate, employers are not required to do so—they can choose to reimburse you at a higher or lower rate than the ATO cents per km rate.

If you do not receive reimbursement for your business kilometres, you can claim a deduction at tax time. Using the upcoming cents per km rate, you can claim up to 5,000 business kilometres for the 2024-25 tax year. You are not required to keep records of the kilometres you’ve driven, but the ATO may ask you to show how you worked out your cents per km claim. Due to this, we recommend you keep a log book of your business driving throughout the year.

You can read up on reimbursements and car expenses deductions for employees in our dedicated guide.

If you drive over 5,000 business kilometres

Consider using the ATO's logbook method if you drive more than 5,000 km for business purposes throughout the tax year. This method allows you to claim all your actual car expenses and doesn’t have a business kilometre limit. It can be used by sole traders, partnerships, and employees who claim expenses for a car. Compare the cents per km method to the logbook method to see which may be better for your situation.

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