Logbook Method: How to Claim Car Expenses From the ATO

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Do you know the old adage what you don’t know can’t hurt you? Well, this time it can. Sort of — and we mean financially.

Being unaware of the logbook method can make you miss out on lucrative tax deductions.

According to RACQ, Australians have to fork out between $8,203-$13,662 for their running car expenses. It’s bad news, but not for an optimist or a resourceful type.

Now, how about you get some of that money back on your tax return?

Buckle up: Today you’re going to learn how to claim car expenses from the ATO using the logbook method. We’ll let you in on some tips and tricks you can try this tax-filing season!

Cents Per Kilometre Method vs. the Logbook Method

It doesn’t take much to make a valid claim at tax time. You just need to get the gist of how things work so you make the system work to your advantage.

There are two methods, both of which you’ve heard of: the cents per kilometre and the logbook method. Yet, the next thought that comes to mind is which one is smarter to use?

In all likelihood, the one that will get you a bigger tax return.

Here is where the logbook method scores a few extra points over the other one. While the cents per kilometre method allows you to claim a set rate for fuel expenses only, the logbook method lets you expand on this.

Here’s a list of vehicle expenses you can claim using the logbook method:

  • fuel, oil, and servicing costs
  • insurance
  • registration
  • vehicle depreciation

And while the logbook method enables you to make the most of your tax deductions, you still CAN’T use it to claim:

  • the purchase cost of the car
  • parking and speeding tickets as well as the other fines

Check out this page to get into the nitty-gritty of the more or less subtle differences between the two methods.

How to Calculate Your Deductions Using the Logbook Method

For starters, let’s get one thing straight. The cents per kilometre method lets you claim a deduction based on a fixed rate. Yet, the logbook method is based on working out the business use percentage of your car expenses.

Either way, you can claim a deduction only if you use your own car for business purposes. Also, bear in mind that you’re able to claim only the expenses you incurred during your business drives.

To calculate your business use percentage, you need to keep records of your drives in a logbook. Next, you apply a simple calculation to work out how much you can claim. You send the records to the ATO and presto!
How to Calculate My Deductions
Now, we’ll give you a vehicle logbook example to illustrate how this looks in a real-world situation.

Imagine you’ve covered a total of 10,000 kilometres during your 12-week logbook period. Of this, 4,800 kilometres were driven for work-related purposes. Here’s how you’d do your number crunch:

4,800 ÷ 10,000 × 100 = 48%

This calculus gives you the exact percentage of your work-related drives. You’re allowed to claim 48% of all your car expenses for the fiscal year.

To get to your final deduction amount, there’s one more operation to carry out. Multiply your total expenses by your business-use percentage. Let’s say your total car expenses amount to $12,000. Here’s how you go about the calculation:

$12,000 × 48% = $5,760

Do it the usual way or use the ATO Work-related car expenses calculator for fast results.

How to Keep a Vehicle Logbook

Now that you’re clear on how to calculate your car deductions, let’s move onto the trickier part: recording your trip details in a logbook.

Ask anyone and they’ll tell you it’s a harrowing task.

Understanding the ATO tax rules is a challenge in itself. And then there’s all this legwork around keeping your records. The ordeal, as prescribed by the ATO, is going to last you for 12 consecutive weeks because this is how long you should keep your logbook.

To top it off, inconsistencies in keeping a logbook can get you in trouble. So, while you’re at it, make sure you keep good records because an invalid car logbook can cost you over $9,000 per year.

So, to be on the safe side, learn how to keep your tax records properly.
 Information Should I Record
Accurate records are your way to a lucrative tax deduction as well as your way out of trouble with the ATO. Use the table below to figure out what records you should keep during the logbook and non-­log book year.

logbook requirements chart

How Long Does a Logbook Last?

As you already know, you need to log each business journey for 12 weeks. The logbook period should be representative of your annual business mileage.

But what if the financial year is running out and you still haven’t completed your 12-week logbook? No worries, you just continue your records into the next financial year.

Once you’ve completed your logbook, it’s valid for the next five years.

But you’re not done recording trip information after the first logbook year. You need to keep recording your odometer readings into the consecutive years.

How to Take the Hassle Out of Keeping a Logbook

Taking the time to claim car expenses is a drag for some, while for others it’s a next to impossible feat. This is the reason why many Australians miss out on their car deductions.

Caught in the busy cycle of work and home responsibilities, they can’t find the time. Nor the enthusiasm, for that matter.

Enter an ATO logbook app. It’s been the next big thing in the accounting professionals community. And for good reason. A logbook app makes filing your tax return easy.

It enables you to have your ATO compliant documentation ready for hand-over at tax time, with little to no effort.

Sounds like an app you should pursue? Oh, yeah it does.

Use an app like GOFAR to record your work-related trips and take care of all the legwork.

It’s a great technical solution for all those that want to have accurate mileage records without having to waste time on manual logging. Anything’s more fun than doing the admin work, right?

SBS Small Business Secrets features GOFAR from GOFAR on Vimeo.

The Ball Is in Your Court

Now that you know everything about the logbook method, put this knowledge to good use. You’ll be happy you did once you get that large tax refund.

GOFAR will help you get there. It’s an app that can be trusted. By leveraging the OBD2 scanner technology, the app makers bring to you one of the most reliable products on the market.

It will not only help you stay sane during the logbook period, but it will also give you other long-term benefits. You’ll be able to:

  • Log, calculate and export work-related expenses with a swipe on your phone.
  • Never miss a single trip again: GOFAR offers an automatic trip logging solution.
  • Save money on fuel: GOFAR Ray device teaches you how to drive smartly.
  • Save money on car servicing: The app sends you alerts whenever there’s a car fault.

Now, check out how others boost their tax return with GOFAR.

Track Work Mileage With GOFAR

  • Log, calculate and export business expenses at the press of a button
  • No ongoing fees
  • Available on iOS and Android

Get GOFAR now

GOFAR mileage tracker app on a white smartphone screen
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