If you are a business owner or claim work-related expenses, good record keeping is essential. It ensures that you are maximising the deductions available to you, but also ensures that you are adhering to the ATO substantiation requirements, which means if the ATO decides to audit you, you are able to prove those deductions.
Last year we put together a guide to keeping good tax records and as we head towards the final quarter for the 2019-2020 financial year, we take a closer look at vehicle log books.
A vehicle logbook shows the business or work-related use of your vehicle. You are required to keep a logbook in the following instances:
Employees (including owners) using a work vehicle - If you use a business owned car (ie, that is owned through a company or trust), you may be required to keep a logbook for Fringe Benefit Tax purposes for your employer.
Sole Traders and Partnerships claiming a car - If you use a car using the logbook method to claim deductions for business use car expenses.
Individuals claiming a car for work purposes - If you use a car for work related purposes, and you are travelling more than 5,000 business kms per year.
Logbooks need to be kept every 5 years or if your business use increases or decreases significantly. This means that if your last vehicle logbook was maintained in 2015, you need a new one for the 2020 year. If you don’t have a valid logbook, you will not be able to claim your car deductions using this method.
A vehicle logbook needs to be kept for 12 continuous weeks, that is representative of your travel throughout the year. Accordingly, if you are going to be taking an extended period of leave that would normally not happen during the year, this may not be the opportune time to start a logbook. A logbook does not need to cover a 12-week period in the same financial year. If you started to use your car less than 12 weeks before the end of a financial year, you can continue to keep a logbook into the next year, so that it covers the required 12 continuous week period.
What should I record in my logbook?
The date the logbook period begins and ends
The car’s odometer readings at the start and end of the logbook period
The total number of kilometres the car travelled during the logbook period
The reason for the journey (such as a description of the business reason or whether it was for private use)
The start and end date of the journey
Odometer readings at the start and end of the journey
The number of kilometres travelled for each journey. If you make two or more journeys in a row on the same day, you can record them as a single journey
The business-use percentage for the logbook period
The make, model, engine capacity and registration number of the car.
It’s important to note that you also need to record the odometer readings at the start and end of each subsequent income year your logbook is valid for. If you are a Heath Accounting Solutions client, keep an eye out towards the end of March (for business clients – company & trusts) and towards the end of June (for sole traders, partnerships and individuals), as we will send you an email or letter with a list of the details needed each year.
Where do I get a logbook?
You can buy a logbook from a stationary shop, your local newsagents or Officeworks. You can also buy logbook apps from the app store. In addition, the ATO has an app: https://www.ato.gov.au/general/online-services/in-detail/mydeductions/mydeductions/ that you can use and share with your accountant.
If you would like us to take a look at your logbook or have any questions about claiming work related expenses, please contact Diana on 0438 018 348 or call the Heath Accounting office: (07) 3425 1115
General Advice Warning – The information in this article is educational and general in nature. It does not take into consideration your personal financial or taxation information, goals and objectives. Please ensure you seek appropriate financial and taxation advice.
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