How to Use Your Car Logbook for Tax Purposes

[Updated August 20, 2024]

If you use your vehicle for work and do not deduct the amount of km you drive, you are shortchanging yourself and missing out on a maximised tax refund.

Some taxpayers make the mistake of paying more in taxes than they should because they do not know about the deduction for vehicle use or because they are unsure how to claim it.

We know the best ways to make the most of your tax-deductible expenses, including vehicle use. A car logbook is a preferred method of keeping track of your kilometres. Not sure how to use a logbook? Here is a helpful guide.

Steps to Use Your Car Logbook for Tax Purposes

1. Start a 12-Week Logbook Period: Record both business and personal trips for 12 consecutive weeks to represent your typical annual travel.
2. Record Essential Details: Log dates, odometer readings, total kilometres travelled, and the purpose of each journey (work or personal).
3. Calculate Business Use Percentage: After 12 weeks, divide business kilometres by total kilometres and multiply by 100 to find your business use percentage.
4. Use the Logbook for Up to 5 Years: As long as your driving habits don’t change significantly, the same logbook can be used for up to five years.
5. Claim Additional Car-Related Expenses: Keep receipts for expenses like insurance, fuel, and maintenance to claim these as deductions.
6. Maintain Compliance: Ensure all required information is logged accurately to avoid ATO rejection of your claims.

What is a Car Logbook?

A car logbook is an easy way to record your travels so you can use the information for your income tax deductions. Contrary to what many people believe, maintaining a logbook is not tricky. It is more about getting into the habit and keeping up with jotting down information daily. Usually, after a few days, it will become a natural part of your routine.

Do I Keep a Logbook Every Day for a Year?

You only need to keep a logbook every day for 12 consecutive weeks. These 12 weeks are meant to represent your travel throughout the year. So, if you know you are taking a two-week holiday, do not plan on starting your logbook if it coincides with the time that you will be away. Otherwise, you will have fewer work-related travel km to log and will receive less money than you should.

Another point not everyone considers is that you can submit the same logbook to the ATO for five years. So, the 12 weeks of recording your mileage is a minimal task when compared to the benefits you will get for five years. However, if your driving habits change, for example, you move or change jobs, you should start a new logbook to reflect the changes, especially if you are driving more than in the past.

Where Do I Purchase a Logbook?

You can buy preprinted logbooks at stationery stores. You can also download electronic logbooks from various sites online.

What Information Do I Record in My Logbook?

According to the Australian Tax Office, you need to record the following information:

• Dates the logbook begins and ends
• Your vehicle’s odometer reading at the beginning and end of the logbook period
• The total number of kilometres travelled during the logbook period
• The number of kilometres driven for each journey. If you make two or more journeys in a row on the same day, you may record them as one. For Example, Erin drives to the bakery shop, the office, and the grocery store on the same day. She can record this as a single entry in her logbook.
• Your car’s odometer readings at the start and end of each successive income year your logbook is valid
• Your vehicle’s make, model, engine capacity and registration number
• The percentage of use for business

For each journey, you need to record:

• The reason for the journey, whether it was for work or personal events
• The start and end date of the journey
• The vehicle’s odometer at the beginning and end of each journey
• The kilometres travelled

How Do I Calculate Business Use Percentage?

After completing the 12-week logbook, you can calculate the business use percentage by:

• Divide your business kilometres by your total kilometres
• Multiply the total by 100
• This is your Business Use Percentage

For Example:

You travel 4,000 km during the 12 weeks you are recording your km
2,200 km were work-related.
2,200 ÷4,000 x 100= 55 per cent business use

In addition to claiming the number of kilometres driven, you can also claim several other deductions for other car-related expenses. Be sure to keep your receipts for these expenses. The ATO will want to see proof of your charges. These include:

• Insurance for your vehicle
• Registration fees
• The costs of running your cars, such as gas and oil
• Fuel servicing
• Vehicle depreciation

Are there Expenses that I Cannot Claim?

Drivers ask this question frequently. Some expenses cannot be claimed on your income tax:

• The cost of purchasing the car (however, depreciation can be claimed over time)
• Any fines, traffic citations, or parking tickets

Are there Other Methods for Claiming Car-Related Expenses?

You can also claim your vehicle’s expenses using:

• The Actual Cost Method – Is based on providing the ATO with receipts for all business-related motor vehicle expenses. When using the actual cost method, you can only claim the percentage of the actual costs related to the vehicle’s business use. If the car is used for both business and personal driving, you must have a way to calculate the business-use percentage.
• The Cents Per Kilometre Method – You can work out the amount of money you can deduct from your income taxes by keeping track of exactly how many kilometres you drive for work purposes. This method allows you to claim up to 5,000 business kilometres per car per year at a flat rate of 78 cents per kilometre for the 2023-2024 tax year. This rate includes all running costs, so no additional expenses can be claimed.

FAQs

What is the maximum for claiming kms on tax without a logbook?

The cents per kilometre method allows you to claim up to 5,000 unlogged business kilometres per car per year at a rate of 78 cents per kilometre for 2023-2024. This rate includes all running costs, so no additional expenses can be claimed.

You owe it to yourself to make sure you get every tax deduction coming to you. If you need assistance figuring out how to claim car use or for help with any other topic, feel free to reach out to us. My Tax Refund Today experts can give you the information you need to lodge your income tax confidently, knowing you are getting the best tax refund possible.