Do you use your vehicle often for work?
If so, there are tax refunds you may be missing out on.
If you aren’t sure how to claim vehicle use deductions or how to use a tax car logbook, our simple guide has you covered.
In this guide, we’ll cover:
- What is the Logbook for the Car Tax Method?
- How to Do the Logbook for the Car Tax Method
- What Information Do I Need to Record in My Tax Car Logbook
- How to Calculate Business Use Percentage for Tax Car Logbook
- Example Scenario Using Tax Car Logbook
- Tips for Using a Car Logbook for Tax Return
- How to Get a Logbook for Car Tax
- What Can I Claim and What Can’t I Claim in My Logbook for Car Tax?
- Can I Use the Tax Car Logbook Method for Two or More Cars?
- How Many Kilometres Can I Claim in My Tax Car Logbook?
- How Long Do I Need to Do a Logbook for Car Tax?
- How Often Do I Need to Do a Logbook for Car Tax?
- Is the Logbook Method Right for Me?
What is the Logbook for Car Tax Method?
A car logbook for taxes is an easy way to keep track of your business-related kilometres. Come tax time, you’ll have a detailed record of business-related car use to reference for income tax deductions.
By recording your kilometres according to the Australian Taxation Office tax car logbook method regulations, you can make sure you are getting a maximum tax refund.
How to Do the Logbook for Car Tax Method
At its simplest, here is how to do the logbook method:
- Get a logbook
- Choose 12 consecutive weeks to record your travel (try to choose weeks that are a good representation of the entire income year)
- Keep detailed entries of all trips during the 12 weeks, including both business and personal trips
- Record all necessary info as required by the ATO (reason for the journey, kilometres travelled, dates, etc.)
- Keep receipts of vehicle-related expenses
- Calculate your business use percentage (explained below) to determine the amount of vehicle expenses you can claim for that income year
What Information Do I Need to Record in My Tax Car Logbook?
According to the Australian Tax Office, you need to record the following information for your logbook for 12 consecutive weeks:
- When your logbook period begins and ends
- Your vehicle’s odometer readings at the beginning and end of the logbook period
- The total number of kilometres travelled with your car during the logbook period
- The number of kilometres travelled for each journey (two or more journeys on the same day can be combined and recorded as a single journey)
- Your odometer readings at the start and end of each subsequent income year that your logbook is valid for
- The business-use percentage for the logbook period
- The make, model, engine capacity, and registration number of your car
For each journey, the ATO states you must record the:
- Reason for the journey (if it was for personal use or what business reason it was)
- Start and end date of the journey
- Odometer readings at the start and end of the journey
- Total kilometres travelled
Failing to include all required info or not following the instructions will result in the ATO deeming the logbook invalid and voiding your expense claims.
How to Calculate Business Use Percentage for Your Logbook for Car Tax
Using your logbook to calculate your business use percentage is surprisingly straightforward.
Once you complete your 12-week logbook, your business use percentage can be calculated by dividing your distance travelled for business by your total distance travelled and then multiplying by 100.
The business percentage equation looks like this for the 12 weeks:
Distance travelled for business ÷ Total distance travelled × 100 = Business use %
This business use percentage can then be used as a deduction for your eligible vehicle expenses for the income year.
For instance, if you calculated that 50% of your travel during the 12 weeks was business-related, you can claim 50% of all vehicle expenses for that income year.
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Illustrative Example: How to do a Car Logbook for Tax Returns
Jill uses her car for business throughout the year. She wants to make sure she isn’t paying more taxes than necessary. She decides to use a logbook for car tax to record her kilometres.
She tracks her kilometres for 12 consecutive weeks, making sure to record every single trip she takes, even personal ones.
Jill follows the logbook regulations set by the Australian Tax Office, making sure to record the travel dates, odometer readings, total kilometres travelled during the logbook period and for each journey, the reason for each journey, her vehicle details, and other required info.
At the end of her income year, Jill’s logbook indicates she travelled 7,000 kilometres total during the 12 weeks she tracked.
She calculates her business use percentage using ATO’s method of dividing the total distance travelled for business by the total distance travelled and multiplying that amount by 100.
Of her 7,000 kilometres, 5,000 were for business-related trips. Jill divides 5,000 by 7,000 and multiplies this by 100 (5,000 ÷ 7,000 × 100 = 71%). This indicates that 71% of her travel was business-related.
Her total eligible vehicle expenses for the income year, including the cost of insurance and depreciation, are $7,500. She kept receipts throughout the year for gas, oil changes, insurance, and registration fees to prove these expenses.
To calculate the amount she can claim as a deduction, she multiplies her total eligible work-related vehicle expenses by the percentage she uses her vehicle for business:
$7,500 × 71% = $5,325
Jill finds that after using her logbook to record her kilometres, tax time is easier and she gets a bigger return than normal.
Tips for Car Logbook for Tax Return
Here are some tips to simplify your logbook for car tax:
- Record all details and kilometres travelled right away — this is far easier than recording info two weeks later when you may not remember the reason for the trip or the exact miles
- Make your logbook part of your work routine so it becomes a habit to record any trips right away during your 12 consecutive weeks
- If you know you’ll be gone on holiday, avoid starting your logbook. Rather, find a 12-week period that is a good representation of your entire income year.
- Keep receipts for vehicle insurance, oil changes, gas, registration fees, and other eligible expenses throughout your income year. The ATO requires proof of these charges to be eligible for a deduction.
FAQs
How do I get a logbook for car tax?
If you’re wondering how to get a logbook, it’s simple.
Many stationary shops offer preprinted logbooks for purchase. Or, you can visit several websites that offer electronic logbooks for download.
If you are a sole trader with a relatively simple tax return, you can make a logbook and record work-related car trips using ATO’s myDeductions tool.
What can I claim and what can’t I claim in my logbook for car tax?
It is important to know what you can and can’t claim in a logbook for car tax. The following expenses cannot be claimed in your tax car logbook:
- The purchase cost of the car
- Traffic citations
- Fines
- Parking tickets
Along with claiming the kilometres you drove, you can also claim these car-related deductions if you have proof:
- Vehicle insurance
- The cost of operating your car (oil and gas)
- Vehicle depreciation (learn more about claiming vehicle depreciation here)
- Registration fees
- Servicing costs
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Can I use the tax car logbook method for two or more cars?
Yes, you can use the tax car logbook method for more than one vehicle. However, the ATO states that the logbook for two or more cars must cover the same 12-week period.
How many kilometres can I claim in my tax car logbook?
As opposed to the 5000 km limit of the cents per kilometre method, you can claim all your kilometres with a compliant logbook.
How long do I need to do a logbook for car tax?
You do not need to keep a tax car logbook for the entire year. Rather, you only need to record every trip (personal and business) for 12 consecutive weeks of your income year. These 12 weeks need to be a good representation of your travel throughout the year.
How often do I need to do a logbook for car tax?
Many people do not realize that a logbook can be valid for several years.
The Australian Taxation Office states that each logbook can be valid for up to five years. A new logbook can be started at any time.
If you use a logbook from an earlier year’s business-related percentage, you need to keep that logbook and make sure to maintain odometer readings in the following years.
If you change the type of work you do, how much you drive, or otherwise change circumstances, you’ll want to consider starting a new logbook.
Is the logbook method right for me?
If you use your vehicle for a lot of business travel, the logbook method may get you the biggest tax refund. This is especially true if you travel more than 5,000 km for business in an income year.
As opposed to the cents per kilometre method that only applies to fuel expenses, the logbook method allows you to claim a percentage of all business-related car expenses, such as maintenance, fuel, and insurance.
Questions on the Tax Car Logbook Method? We Can Help!
If you’ve never kept a car logbook for tax purposes, we understand that it can feel confusing and overwhelming to get started.
But it’s worth it!
Once you get in the habit of tracking your mileage and making it a routine to add the details to your logbook, you may be surprised by how easy it is.
And the results are worth it once tax season hits!
If you have questions about keeping a car logbook for tax returns, please feel free to contact us.
Our expert accountants at TaxReturn.com.au can help you maximise your tax return and lodge it quickly, accurately, and easily. Get in touch today for any questions or to set up an appointment with one of our friendly accountants.
