How the Logbook Method Works for Vehicle Claims in Australia

Written by

Jason Robinson

FCPA, Director & Co-Founder

Enthusiasm so infectious you’ll accidentally start a business after one chat.

Often, one of the biggest perks of owning a business, or being an employee that has to use your vehicle for work, is being able to write off your car and its seemingly never-ending costs as tax deductions. Whilst this is largely true – there’s a misconception that you can either claim 100% of the expenses (unless your industry specifically demands it, this isn’t correct) or that you don’t need to keep records. 

Logbooks are at the top of our nagging list pre and post-tax return meetings. They’re something that most people still don’t keep. Still, with recent ATO changes, logbooks are necessary to complete your end-of-year returns (whether you’re a business owner or an individual looking to claim car expenses as a tax write-off). 

Here’s everything you need to know about logbooks: what they are, why you need one, and the easiest ways to keep one.

What is a logbook?

What is a logbook of all journeys, and why does the ATO require one? A motor vehicle logbook records all your vehicle use for 12 consecutive weeks, tracking all personal and business trips. This information is required to claim tax deductions for your motor vehicle using the Logbook Method rather than the Cents Per Kilometer Method, which requires diary entries and no receipts. Read on to understand why it’s beneficial to go to the extra effort of a vehicle logbook…

Why do I need to keep a logbook vehicle?

If you use your car for business or work purposes, you need a logbook to maximise your claims and get the best tax deduction outcomes for your circumstances. If you wish to claim a tax deduction for all costs related to your vehicle, including registration, insurance, repairs and maintenance, interest on finance, and depreciation – you need a vehicle logbook. Without one, you are not able to claim these expenses. You must keep all receipts and records even if you have your 12-week logbook. You can read about the best ways to record keep over here on a previous blog.

For example: if you drive approximately 5000 km for work purposes, it may be simpler for you to stick to the cents per kilometre method; however, if you regularly use your vehicle for business or work travel, more than 5000 km, we highly recommend keeping a logbook for tax purposes.

What Are The Benefits of Keeping Vehicle Logbooks? 

Keeping a vehicle logbook might seem like just another task on your to-do list, but it’s so much more than meeting ATO requirements. It’s your ticket to unlocking a range of benefits for both individuals and businesses. Let’s break down the perks of maintaining an accurate and detailed logbook:

Maximise Tax Deductions with Accurate Records

Who doesn’t love saving money? With a well-maintained logbook, you can significantly boost your tax deductions. It’s all about keeping precise records of how much you use your vehicle for business purposes. Here’s what you can claim:

• Fuel Costs: Every litre of petrol you burn for work-related travel is money you can get back.
• Maintenance and Repairs: Whether it’s regular servicing, new tyres, or unexpected fixes, these expenses are deductible.
• Insurance and Registration: Your logbook helps you correctly divide these annual costs between personal and work use.
• Loan Interest or Lease Payments: Financing your vehicle? You can claim the portion related to business use too! 

For example, if your logbook shows that 70% of your vehicle use is for business, you can claim 70% of all related expenses. It’s an easy way to ensure you’re getting the most out of your eligible deductions and not leaving any money behind.

Optimise Fleet Management with Comprehensive Logbooks

Logbooks are the best assistance for managing your vehicle fleet if you’re running a business with multiple vehicles. By recording essential details like vehicle mileage, routes, and fuel use, you can:

• Monitor Efficiency: Spot inefficient routes or high fuel consumption and make adjustments.
• Streamline Maintenance: Stay ahead of repairs and keep your vehicles in top condition.
• Improve Cost Allocation: Identify the most cost-effective vehicles and allocate resources smartly.
• Enhance Accountability: With clear records, you can ensure drivers follow policies and use vehicles responsibly.

With this data at your fingertips, you can cut unnecessary costs, boost productivity, and even extend the lifespan of your vehicles, all while staying compliant with ATO tax rules.

Legal Protection During Tax Audits

Let’s be honest, nobody likes the idea of an ATO audit. That’s why knowing how to tell if a logbook is genuine is crucial when verifying your vehicle usage. But your logbook can be your safety net if the ATO ever comes knocking. Here’s why:

• Compliance with ATO Standards: A thorough logbook proves your claims are accurate and meet tax requirements.
• Minimising Penalties: Forgetting or having incomplete records can lead to rejected claims or fines. A logbook helps you avoid these headaches.
• Demonstrating Transparency: Keeping detailed logs shows you’re honest and upfront about your business vehicle usage.

For example, during an ATO audit, the ATO may request evidence of your vehicle’s business usage. A complete logbook that records every trip, along with receipts and maintenance records, can save you from stressful back-and-forth disputes and potential financial loss. 

Business vs. Personal Vehicle Logbooks: What’s the Difference?

Business and personal vehicle logbooks serve different purposes but are equally important.

• A business vehicle logbook tracks the business-related usage of a company-owned vehicle. It includes details like client visits, deliveries, or travel between offices.
• A personal vehicle logbook, used for claiming work-related expenses on a privately owned car, must clearly differentiate between personal and business trips.

Here’s a table comparing business and personal vehicle logbooks in detail.

What happens if I don’t keep a logbook?

If you don’t keep a logbook, you’ll still need to record your kilometres to claim the cents per kilometre method, giving you a maximum deduction of $3,600 (5000 km x 0.72 cents for 2022, increasing to 78 cents or $3,900 for 2023). 

If you fail to keep a diary or logbook, unfortunately, you will not be able to claim a deduction for using your vehicle. 

What kind of vehicle use is considered tax deductible?

Some commonly claimed travel expenses include:

• Driving between two places of work (you cannot claim expenses for travelling between your home and workplace*)
• Driving between your place of work and a client meeting, whether at their office or elsewhere
• *If your place of work changes regularly, you may be able to claim expenses incurred driving between your home and work. The other scenario where this is applicable is if you’re transporting heavy, bulky pieces of equipment (common for many tradies)

For a detailed guide tailored to tradies, check out this simplified guide to accounting for tradies.

The ATO has a very helpful, long list of claimable travel expenses and several examples over here.

We’d also recommend having a squiz at this list of expenses you cannot claim, before you start your logbook! The common mistakes include:

• Long drives from home to work
• Trying to claim trips that are outside of usual working hours (shift, night duty or on-call)
• Doing minor work activities on your way to or from work, like picking up the mail

What are the different ways of keeping a vehicle logbook?

The critical takeaway is to keep your logbook in a way that suits you. Whatever you’re likely to stick with, do it. It might be a pen and paper that’s scribbled on every time you get in and out of the car, an excel spreadsheet, a diary or an app.

Being a tech-savvy accounting firm – we love an app – Driversnote is our app of choice. 

If you prefer a spreadsheet, the driver’s note has a great template to follow, but please include a detailed purpose for each journey, not just “business” or “personal”. If you prefer the old pen and paper method, you can still record all your trips in a logbook at your local newsagent!

Here’s a free Future Advisory template you can download straight away. Or grab an ATO vehicle log book template directly from their app.

Finally, the ATO have their app too. You can find that here. 

What needs to be included in a vehicle logbook?

The log book for car tax claims needs to show every trip, work or personal. These vehicle log books form the basis of your claim and must be kept up-to-date. Most logbooks are valid for 5 years if your work pattern doesn’t change. Here’s what needs to be included in each entry:

• Date
• Start and finish times
• Start and finish odometer readings
• The reason for each drive, in detail! For instance, driving to meeting Future for 22/23FY tax planning or going to get grocery shopping.
• Total number of kms driven
• Start and finish dates, odometer readings and kms travelled for the total logbook period.
• Calculate the business use percentage for the period

Next time we see you for a tax planning or tax return meeting, we look forward to seeing your impeccable vehicle log books or helping you set up one with our free ATO vehicle log book template. 😉 As always, we’re here to answer any questions you may have.

FAQ 

Can I Use a Single Logbook for Multiple Vehicles? 

No, you’ll need a separate logbook for each vehicle. The ATO requires individual records for each vehicle’s business use to ensure accuracy. If you use multiple cars or motorbikes for work, keep a unique logbook for each one to properly track trips, costs, and deductions.

How Long Should I Keep My Vehicle Logbook Records?

Keep your logbook and supporting documents for five years from the end of the financial year you claim deductions. A 12-week logbook remains valid for up to five years, as long as your vehicle usage doesn’t change significantly. Stay organised to avoid future hassles with audits!

What is the logbook method vs cents per kilometre method?

The logbook method and cents per kilometre method are the two ways you can claim vehicle expenses in Australia, and choosing the right one depends on how much you drive for work. The cents per kilometre method is simpler, you claim up to 5,000 business kilometres at a set rate (78 cents per km for 2023-24), giving you a maximum deduction of $3,900.

No logbook required, just diary entries of your work trips. The logbook method requires keeping detailed records for 12 consecutive weeks, tracking every single trip (personal and business), plus keeping all receipts for vehicle expenses.

However, it lets you claim the actual business percentage of all your car costs, fuel, registration, insurance, repairs, depreciation, and loan interest. If you’re clocking more than 5,000 work kilometres yearly, the logbook method usually delivers bigger tax deductions, even though it requires more effort upfront.

How do I calculate my business use percentage from my logbook?

Calculating your business use percentage is straightforward once you’ve completed your 12-week logbook period. Take the total business kilometres you drove during those 12 weeks and divide it by the total kilometres (business plus personal) driven in the same period, then multiply by 100.

For example, if you drove 3,000 business kilometres and 7,000 kilometres total during your logbook period, your business use percentage is 42.86% (3,000 ÷ 7,000 × 100).

This percentage then applies to all your vehicle expenses for up to five years, meaning you can claim 42.86% of your fuel, insurance, registration, repairs, and other car costs. The trick is being honest and thorough during your logbook period, don’t suddenly start driving more for work just because you’re keeping records, as the ATO will smell that a mile away during an audit.

Can I start my logbook at any time of the year?

Yes mate, you can start your vehicle logbook at any time during the financial year, not just on July 1st. The key requirement is maintaining continuous records for 12 full weeks, that’s 84 consecutive days without any gaps. Many people kick off their logbook at the start of a new financial year for simplicity, but if you’ve just started using your car for business in October, you can begin then and complete your 12 weeks by late December or early January.

Once you’ve got those 12 weeks sorted, your logbook remains valid for five years (unless your work travel patterns change significantly). A smart tip from our Melbourne office: start your logbook during a typical work period, not during Christmas holidays or an unusually quiet month, as you want it to accurately reflect your normal business versus personal usage split.

What counts as a valid business trip in my logbook?

A valid business trip is any journey that’s necessary for earning your income, but there are specific rules about what counts. You can claim travel between two different work locations, trips from work to meet clients, driving to conferences or training, and travel to pick up business supplies or equipment. Here’s where it gets tricky: you generally can’t claim your regular commute from home to your primary workplace, even if you’re thinking about work the whole way there.

However, tradies and others who carry bulky equipment that can’t be stored at work might qualify for home-to-work claims. You also can’t claim trips that happen to involve minor work tasks on your regular commute, like dropping off mail on your way home. The detail matters here, writing “business meeting” in your logbook isn’t enough. Instead, write “drove to client meeting at ABC Company, Richmond to discuss 2024 marketing strategy.” That level of detail protects you during ATO audits and shows genuine business purpose.

Do I need to keep receipts if I’m using the logbook method?

Absolutely, keeping receipts is crucial when using the logbook method, the logbook alone isn’t enough. Your 12-week logbook establishes what percentage of your vehicle use is for business, but you still need receipts and records for all vehicle-related expenses throughout the entire year. This includes fuel receipts, service and maintenance invoices, insurance renewal notices, registration papers, finance or lease statements, and depreciation calculations.

Think of it this way: your logbook tells the ATO “I use my car 60% for business,” while your receipts prove “here’s what I spent on the car.” Without receipts, you can’t claim the actual expenses, which defeats the whole purpose of going through the logbook effort instead of just using the simpler cents per kilometre method. Store your receipts digitally using accounting software or apps, faded paper receipts won’t help you in an audit three years down the track.

What happens if my work travel pattern changes after completing my logbook?

If your work travel pattern changes significantly after you’ve completed your 12-week logbook, you’ll need to start a fresh logbook to reflect the new usage pattern. Significant changes include starting a new job, changing roles that require more or less travel, moving house so your commute changes, or taking on additional work locations. For example, if your original logbook showed 40% business use but you’ve since taken on a regional sales role that has you driving to clients daily, your actual business use might now be 70%, and you need a new logbook to claim that higher percentage.

The ATO can spot inconsistencies during audits, and claiming deductions based on outdated usage patterns is risky. On the flip side, if your travel pattern stays relatively consistent, you’re still doing the same job, living in the same place, visiting similar clients, your logbook remains valid for the full five years. When in doubt, chat with your accountant about whether your changed circumstances warrant a new logbook.

Can employees claim vehicle expenses using the logbook method?

Yes, employees can absolutely claim vehicle expenses using the logbook method, not just business owners. If you’re an employee who uses your personal vehicle for work purposes (beyond the regular home-to-work commute), you can maintain a logbook and claim the business portion of your vehicle expenses on your individual tax return. This commonly applies to sales reps, nurses who travel between medical facilities, consultants visiting client sites, and workers who carry tools or equipment.

The same rules apply, you need a 12-week logbook showing your business use percentage, plus receipts for all vehicle expenses throughout the year. However, you can’t claim expenses if your employer already reimburses you for vehicle costs through allowances that are shown on your payment summary. And remember, the ordinary trip from your home to your regular workplace doesn’t count as work travel, even if you’re an employee thinking about spreadsheets the whole way there.

Is there a minimum business use percentage required for logbook claims?

No, there’s no official minimum business use percentage required by the ATO to use the logbook method, even if your business use is just 10%, you can technically claim that 10% of your vehicle expenses. However, here’s the practical reality: if your business use is very low (say, under 20%), the cents per kilometre method might actually give you a better result with far less hassle.

The logbook method only makes financial sense when your business use is high enough that claiming the actual percentage of all expenses exceeds what you’d get from the simpler method. For instance, if you only drive 2,000 business kilometres per year at 10% business use, you’d get more from claiming those 2,000 km at 78 cents each ($1,560) than maintaining a logbook and receipts all year to claim 10% of perhaps $8,000 in car expenses ($800). Run the numbers with your accountant before deciding which method to use, sometimes simple wins over thorough.

Can I use my logbook to claim electric vehicle or hybrid car expenses?

Yes, you can definitely use the logbook method to claim expenses for electric vehicles (EVs) or hybrid cars, though some costs are different from traditional petrol vehicles. Instead of claiming fuel, you’ll claim electricity costs for charging, and here’s where it gets interesting.

You’ll need to calculate the cost of electricity used for charging, which means tracking your home electricity rates and charging sessions, or keeping receipts from public charging stations. You can still claim registration, insurance, tyres, servicing, and depreciation just like any other vehicle. For EVs, depreciation can be significant given their higher purchase prices.

One quirk: if you’re charging at home, you might need to demonstrate how you’ve calculated the electricity cost, as your home power bill won’t separate out vehicle charging.

Many EV owners use smart chargers that track usage, or calculate based on the vehicle’s battery capacity and known charging sessions. The 12-week logbook requirements remain identical regardless of what powers your wheels.

What’s the best way to remember to update my logbook every trip?

The biggest challenge with logbooks isn’t the concept, it’s actually remembering to record every single trip for 12 weeks straight. Here are some proven tactics from Future Advisory clients who’ve nailed their logbooks:

• First, use a logbook app like Driversnote that can automatically track trips using GPS, then you just need to classify them as business or personal.
• Second, if you prefer manual tracking, leave your logbook or a notepad in your car’s console where you’ll see it every time you turn off the ignition.
• Third, set a daily reminder on your phone for the end of your workday to update your logbook before you forget the details.
• Fourth, develop a ritual, update your logbook every time you fill up with fuel, for instance. The trickiest part is remembering those quick personal trips on weekends; they all count towards your total kilometres.

After a couple of weeks, recording trips becomes automatic, like checking your mirrors. Just push through the initial 12 weeks, and you won’t need to do it again for five years.