September 13 - Books - Tax Accounting

Everything you need to know about vehicle logbooks

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.

vehicle logbook
What is a vehicle logbook?

What is a logbook?

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 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 outcome 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 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. 

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)

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.

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

What needs to be included in a vehicle logbook?

The logbook needs to show every trip you take over that period – work or personal. 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 logbooks 😉 As always, we’re here to answer any questions you may have.