ATO Cents Per KM [2023 Car Allowance Guide]

Whether you’re a finance manager trying to sort out employee reimbursements, or an employee trying to see what you can get reimbursed for after driving to that conference last weekend, our guide to car mileage allowances in Australia should help.

In this guide, we’ve covered everything from eligible vehicles to what counts as mileage, how to record your mileage (and when you need to), and more.  

What is mileage reimbursement?

Mileage reimbursement—like anything involving the ATO—can be a little confusing. To make things more complicated, some terms—like “mileage reimbursement” and “car allowance”—are used interchangeably, although they’re not quite the same. 

Here’s a quick primer if you’re unfamiliar: 

Mileage reimbursement refers to a set rate that employees are reimbursed per kilometre for business mileage. The ATO (Australian Taxation Office) sets a standard mileage reimbursement rate, which is currently $0.78. 

This mileage reimbursement rate is intended to take into account all of the costs associated with driving and owning a vehicle—things like registration, fuel, insurance, servicing, even depreciation. 

Car allowance, on the other hand, typically refers to a reimbursement scheme companies may use where they give employees a fixed amount every month to cover business-related driving expenses. This is more common at companies where employees frequently drive for business, and it’s not based on individual monthly mileage. 

What counts as business mileage

Of course, there are a number of rules and qualifications around what counts for reimbursable business mileage. 

Typically, the following types of driving can be reimbursed as business mileage: 

• driving to meetings or conferences that are for business but not at your typical workplace 
• running errands or getting supplies for the business
• traveling from your usual workplace to a secondary or alternate place of business (i.e. a second office or a client’s office for a business meeting) 
• traveling between two or more places of employment, for example, if you have more than one job
• going on customer visits 

Commuting between your home and workplace typically does not count as business mileage except in rare circumstances. 

To reimburse your employees for mileage—or to get reimbursed, if you are an employee—there are two primary…