ATO Increases Cents per Kilometre Rate to 91 Cents

The Australian Taxation Office (ATO) has announced an increase to the cents per kilometre rate from 88 cents to 91 cents per kilometre, effective 1 July 2026. The rate is reviewed annually and is designed to reflect the cost of operating a motor vehicle, including fuel, registration, insurance, maintenance and depreciation.  

ATO - LI 2026/19 

What does this mean for employers? 

If your business reimburses employees for using their personal vehicles for work-related travel, now is a good time to review your reimbursement rates and payroll settings. 

A key consideration is where employees are being paid more than 91 cents per kilometre. Amounts paid above the ATO benchmark rate may create payroll reporting and PAYG withholding obligations depending on how the payment is structured and reported. Businesses should ensure their payroll processes are aligned with the updated rate. 

Important facts to remember 

• The cents per kilometre method can be claimed for a maximum of 5,000 work-related kilometres per vehicle per year 
  

• The rate covers all vehicle running costs, including fuel, servicing, insurance, registration and depreciation. Additional vehicle expenses cannot be claimed on top of this rate when using the cents per kilometre method.  
  

• Employees should continue to keep records showing how they calculated their work-related kilometres, even though receipts for vehicle costs are not required under this method. 
  

Any questions – please reach out we are here to help.