The SCHADS vehicle allowance updated 1 July 2026. If your payroll still has the old rate, you’re underpaying staff. Here’s what to check and fix today.
The SCHADS vehicle allowance is moving to $1.05 per kilometre from 1 September. If your payroll system doesn’t have that update in it yet, you’re about to underpay your staff.
Here’s what to check, and what to fix, before this becomes a compliance problem.
What the vehicle allowance actually covers
Under the SCHADS Award, if your worker uses their own car for work purposes, you have to pay them a vehicle allowance per kilometre. This covers driving a client to a medical appointment, picking up groceries or medication for a client, or travelling between two work locations during the same shift.
It doesn’t cover the drive from home to their first client. That’s a commute and it’s treated differently.
The rate isn’t fixed. It gets reviewed and updated periodically. Most providers find out too late. Or not at all.
When the new rate kicks in
The new rate of $1.05 per kilometre applies from the first full pay period starting on or after 1 September 2026. That’s not just a technicality.
If your first pay period after 1 September starts on 1 September, that’s when the new rate kicks in. If it starts on 8 September, that’s your date. You need to know your pay period start date to apply this correctly.
Update your payroll system
Go into your payroll system now. Find where the SCHADS vehicle allowance rate is stored. Update it to $1.05 per kilometre. Then look back at any pay cycles that ran after your first pay period in the new rate period. If the old rate was used, calculate the difference and pay it in your next run, with a clear note on the payslip explaining what it is and why it’s there.
Check your contracts and internal documents
If your employment contracts specify the vehicle allowance rate as a fixed dollar figure, your contract and the Award are now out of step. And this will happen to you again every time the rate is reviewed.
The cleaner approach is to have your contracts reference the Award rate rather than state a specific number. Something like: “vehicle allowance is paid at the rate set by the SCHADS Award.” That way, you’re not revising contracts every time it moves.
Check your HR policies and your rostering system too. If the rate is stored as a fixed amount anywhere in your systems, update it now.
NDIS transport and SCHADS vehicle allowance are two different things
If you’re delivering transport as a billable support item under the NDIS, this affects your client agreements as well.
The SCHADS vehicle allowance and the NDIS transport support rate are two separate figures. They’re set by different bodies, they move at different times, and they have different purposes. The SCHADS rate is what you pay your worker. The NDIS rate is what you can charge the participant.
If your costs have moved because the SCHADS allowance moved, check whether your service agreement pricing still covers them. If it doesn’t, you may need to raise that with your participant at their next plan review or when you’re due to renew their service agreement.
Don’t absorb a cost increase without reviewing it. Document your reasoning and adjust where you need to.
Get your mileage records right
If you’re claiming the vehicle allowance, you need records to back it up. Date, start location, end location, reason for the trip, kilometres travelled. Every trip, every time.
Pay records showing an allowance was paid aren’t enough on their own. You need the trip data underneath them. If Fair Work or the NDIS Commission asks you to demonstrate you paid correctly, a mileage log is the evidence.
Check your current process. Are workers logging every trip? Is that log kept somewhere auditable? Is it matching what’s claimed on the timesheet? If the answer to any of those is no, sort it now rather than scrambling when a review lands.
Your action step today
Three things.
First, go into your payroll system and update the SCHADS vehicle allowance to $1.05 per kilometre.
Second, check your employment contracts and any HR or rostering systems where a rate is stored as a fixed figure. Update them now or, better, reword them to reference the Award rate so you’re not doing this again next time it changes.
Third, know your pay period start date so you’re applying the new rate from the right cycle. The trigger is the first full pay period starting on or after 1 September.
Three steps. Less than an hour. You stay compliant and your workers get paid correctly.
If you want a system that catches these before they cost you, that’s exactly the kind of structural gap we work through inside Bestie in Business. Book a free clarity call to talk through whether it’s the right fit.