Are you looking to navigate the ins and outs of motor vechile expenses and logbooks? Let's buckle up and get ready to drive into the exciting world of business vehicle expenses!
First things first, if you're looking to claim a deduction for your motor vehicle expenses, the tax office requires proof of your business use of the vehicle. This is where a logbook comes in handy. The more you use your vehicle for work-related purposes (about 25% or more), the more you can benefit from keeping a logbook to help you claim your deductible motor vehicle expenses.
If you're an employer or company director and you plan on claiming expenses for vehicles that you or your employees use for work purposes, then it's mandatory that you maintain a logbook for each vehicle to show proof of business use. No ifs, ands, or buts about it!
So, what does a logbook look like? Well, it's just a simple record of your car usage. You need to keep it for 12 consecutive weeks, and it should include at least part of the first year you plan to claim deductions. The same logbook can be used for up to five years, unless there are significant changes to the business use of the vehicle or you replace the vehicle altogether.
（SAACS has an user friendly car logbook template for you to use!）
Now, the tax office is cracking down on proper record-keeping, so make sure your logbook records check out if you want to use the logbook method for calculating deductions on your personal or business tax return. And the ATO might even contact your employer to confirm that you need the vehicle for your work duties, so make sure everything's legit!
Keeping a logbook is easy-peasy. Just record your odometer reading at the start of the logbook period, and then keep track of your travels. Make sure to note the reason for the trip and the number of kilometers traveled (there are even ATO-approved apps to help you out). And remember, travel to and from work doesn't count as deductible unless your employer requires you to transport bulky tools and equipment that can't be stored at work. Sorry, no cheating!
But wait, there are exceptions! You don't need to keep a logbook if:
You have a ute or commercial vehicle with a capacity of at least one tonne that you primarily use for work and to get to and from work, and any private use is minor and incidental (usually only around 2,000 km/year).
You own the vehicle in your personal name and would rather claim deductions using the 'cents per kilometre' method. This method allows you to claim up to 5,000 km per year at a set rate per kilometer, but you still need to keep written records to support your estimate of work-related kilometers.
You own the vehicle in your company name or a trust with a trustee company and would rather use the 'statutory formula' for fringe benefits tax purposes. This formula applies a percentage to the car's cost and can make record-keeping easier.
Phew, that was a lot to take in! But remember, once you've completed your logbook, you can rely on it for up to five years as long as your work-related usage doesn't change significantly. Happy driving (and logging)!
As usual, if you need further clarification and guidance in relation to the above, please contact our team.