Travel Allowance: What You're Owed

The ATO rate for the 2025-26 financial year is 88 cents per kilometre for the first 5,000 business kilometres. That gives you a maximum deduction of $4,400 if you max it out.

Critical thing most people get wrong: this is a tax deduction, not an employer reimbursement. The 88c/km rate is what the ATO lets you claim on your tax return for work-related car travel. Your employer doesn't have to pay you this rate (though some do voluntarily or via enterprise agreements).

The 88c/km rate is designed to cover all your car running costs in one hit — fuel, registration, insurance, depreciation, servicing, tyres, the lot. You don't claim fuel separately on top of the per-km rate.

And here's the kicker: your regular commute from home to work doesn't count. The 88c/km only covers travel for work — visiting clients, travelling between job sites, going to meetings at a different location. The drive from your house to the office? That's private. The ATO doesn't care that it costs you $30 each way.

Two methods available:

• Cents per km: 88c/km, capped at 5,000km. No receipts needed but you must be able to demonstrate how you calculated the distance. Good for moderate work travel.
• Logbook method: Keep a 12-week logbook to establish your work-use percentage, then claim that percentage of ALL car expenses. No kilometre cap. Better if you do serious mileage for work.

This is where your award can save you real money. Some awards include mandatory travel or vehicle allowances that your employer must pay — and with fuel at $2.50+/L, these allowances are worth more than ever.

Key awards with travel/vehicle provisions:

• Building and Construction General On-site Award: Travel allowance of $21.43 per day for employees required to travel to construction sites. Indexed annually. This is on top of your hourly rate.
• Electrical, Electronic and Communications Contracting Award: Travel pattern allowance plus vehicle allowance for employees using their own car — tied to the ATO cents-per-km rate (88c/km)
• Nurses Award 2020: Vehicle allowance for community-based nurses using their own vehicle — currently 88c/km, matching the ATO rate
• Road Transport and Distribution Award: Various fuel and vehicle running cost allowances. Specific amounts depend on classification and type of vehicle.
• Plumbing and Fire Sprinklers Award: Travel and fares allowance for work performed away from the employer's base
• Joinery and Building Trades Award: Travel allowance for employees working at sites away from the workshop

Check your payslip. If your award includes a travel allowance and it's not showing up, your employer is underpaying you. That's wage theft. You can recover up to 6 years of unpaid allowances through the Fair Work Commission or the courts.

Yes — if you're travelling for work. Not commuting. Travelling for work.

The distinction matters enormously:

• Home to office = private travel. Not deductible. Not claimable. End of story.
• Office to client site = work travel. Deductible at 88c/km or via logbook method.
• Site to site during the day = work travel. Deductible.
• Home to client (if home is your base of employment) = work travel. Deductible.

If you're doing genuine work travel, the fuel crisis actually makes your deduction more valuable in real terms. The 88c/km rate was set when fuel was cheaper — but it's a fixed rate regardless of what you're actually paying at the pump. If your actual costs exceed 88c/km (which is increasingly likely at $2.50+/L for less fuel-efficient vehicles), the logbook method will give you a bigger deduction because it's based on actual expenses.

Keep every receipt. The ATO is going to be scrutinising car expense claims heavily this year because they know people will be tempted to overclaim during the fuel crisis. Don't be the one who gets audited.

Some employers provide fuel cards or reimburse fuel costs directly. The tax treatment depends on how it's structured:

Fuel cards provided by the employer:

• If used for work-related travel only, it's generally a tax-free benefit — no FBT for the employer and no taxable income for you
• If used for private travel (including commuting), it becomes a fringe benefit. Your employer pays FBT on the private use portion. It may appear on your payment summary as a reportable fringe benefit

Direct reimbursement from your employer:

• If your employer reimburses you for work-related fuel costs based on actual receipts, this is generally not taxable income for you. But you can't then also claim those same costs as a tax deduction — that would be double-dipping
• If your employer pays a flat fuel allowance regardless of actual costs, this is treated as assessable income — you'll pay tax on it, but you can claim the actual expenses as a deduction to offset it

The FBT implications mean many employers are reluctant to provide fuel cards for commuting — the FBT rate is 47%, which makes it an expensive way to help employees. Some are opting for salary sacrifice novated lease arrangements instead, which can be more tax-efficient for both parties.

Albanese's announcement today cuts the fuel excise from 52.6 cents to 26.3 cents per litre for three months (April through June 2026). So what does that actually mean for your wallet?

The excise cut saves you 26.3 cents per litre. On a typical 65-litre tank, that's roughly $17.10 per fill. Not nothing, but not exactly transformative either when petrol is still north of $2.20/L even after the cut.

Here's what it looks like for different commuters:

Weekly fuel use	Weekly saving	Monthly saving	3-month saving
30 litres (short commute)	$7.89	$34.19	$102.57
50 litres (average commute)	$13.15	$56.98	$170.95
70 litres (long commute/regional)	$18.41	$79.78	$239.33

So a typical commuter using 50 litres a week saves about $13 a week — roughly the cost of two coffees. It helps, but it's not going to change anyone's life.

The real question is what happens in July when the excise goes back up. If oil is still above $116/barrel because the Iran situation hasn't resolved, we'll be right back where we started — or worse.

Use our fuel crisis calculator to work out your personal numbers based on your actual commute and fuel consumption.