Keeping a Vehicle Log Book: What Do Accountants Know That You Don’t

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Keeping a vehicle logbook is a chore most people would rather shy away from. It’s tiresome and tedious work that requires you to make the effort every time you drive your car.

But what if we told you that the benefits outweigh the costs? Failing to record your work related mileage means cutting yourself short when it comes to substantial tax deductions (and we’re talking thousands here).

Now, if you thought for a fleeting moment that you might be willing to try keeping a vehicle logbook, we’d tell you to go forward with it. As would the accounting professionals who know the potential savings you are about to unlock, as well as the shortest way to a neatly kept logbook.

So, buckle up. Today you’ll learn a few tricks on how to track your work related vehicle expenses like a pro. Once you’ve read this article you’ll have a proven plan on how to claim your car’s expenses on your tax return the easy way.

So, let’s dive right in.

Learn the ABCs of Keeping a Vehicle Log Book

If you want to claim car expenses at tax time, one of the methods you can use is the cents per kilometre method. Read more about this method in another GOFAR article.

Today we’re giving you an insider look into the cents per kilometre method’s essential companion: the vehicle logbook. If you exceed the 5,000 km limit a year, you should stick to using the vehicle logbook.

Learn the basics, and you’ll soon be able to get more on taxes.

Although ill-famed for being tedious and complex, it’s not rocket science, and can save you thousands when tax time rolls around.

So, ready to learn?

Here’s the basics, you can use a vehicle logbook to determine the business use of a vehicle. Sounds doable, right? It’s easy, you can even calculate the percentage of your car’s expenses for which you’re eligible to be reimbursed.

To put things into perspective,  you should know which vehicle expenses are tax-deductible. We’ve made it easy, by listing them here:

  • Running costs such as fuel and oil
  • Insurance and registration
  • Lease payments
  • Depreciation
  • Repairs and maintenance
  • Interest on motor vehicle loan

What you CANNOT claim are capital costs. So this means no tax deductions for the purchase of a car, nor any upgrades to your car.

You can claim tax deductions for your own car as well as your company car (both bought and leased).

Utility trucks and other vehicles with a carrying capacity of one tonne or more are not considered a car. The same goes for vehicles registered for nine passengers or more.

Keep in mind the ATO requires you to keep a log book for these vehicles. A cents per kilometre method won’t cut it in these cases.

How to Keep a Vehicle LogbookIn order to figure out your business-use percentage, you need to keep a vehicle logbook for 12 continuous weeks.

If you want to claim car expenses for multiple vehicles, keep a logbook for each car for the same period.

The data you provide to the ATO using the logbook method is valid for 5 years. It’s only after 5 years that you’re required to keep a new logbook. Not bad, right?

The ATO deems the 12 week period a valid representation of your annual travel. Do yourself a favour, avoid keeping a logbook during slow business periods or holiday seasons

How to Record Your Work-Related Car Expenses

Now you know the basics of the logbook method, it’s time to discover how to do the ATO logbook method properly.

It’s just a matter of sorting out in your head what information the ATO requires you to record to keep a valid logbook. It’s worth the tiny hassle because once you’ve filled out your logbook, you’ll be able to sort out your finances like a pro

So, let’s get to it.

Here is what you need to keep track of in your vehicle logbook:

  • Start and end dates of your journeys
  • Start and end odometer readings for each trip
  • Kilometres travelled
  • Reason for each trip you take, whether business or personal

Don’t forget to keep track of your car expenses receipts, these are every bit as important as keeping a logbook. The ATO wants you to provide written proof of your car costs, such as insurance and maintenance.

As for the fuel, you can either provide receipts or determine the costs using the odometer.

Last but not least, to keep your business mileage records, you’ll need a logbook format to record your data in it.

You can use a pen and paper logbook, using free printable formats. Take a look at the logbook template below and download it for free.

vehicle logbook template in landscape form
Download Free Vehicle Logbook Templates

Or if you’re comfortable using Excel, you can opt for a vehicle log sheet in excel like GOFAR Excel sheet logbook and you can use it for free as well.

Know How to Calculate Your Tax Deductions

Now you have learned that calculating the tax return of your work-related car expenses isn’t that big of a deal. It’s only a matter of consistency.

You have two tasks to complete after your 12-week logbook period has come to an end.

For starters, you need to calculate the percentage of your business-related drives. This is how you do it:

How to Calculate the Business Use Percentage of Your Car

It’s simple. You divide your business kilometres by the total kilometres you travelled. Next, you multiply the figure by 100.

To illustrate: Let’s say you’ve travelled a total of 10,000km and your logbook shows 7,000km relate to work. The calculation is as follows 7,000 / 10,000 x 100 = 0.7, follow this up by multiplying 0.7 by 100 and you get 70%.

Next on your agenda: work out what your actual work-related car expenses are. This is where you’re going to be able to save on your taxes. Let’s try it!

How to Figure Out Your Tax-Deductible Car Expenses Using a Logbook Method

Using your business use car percentage, you can find out how much of your car’s expenses you can claim back on your tax return.

In other words: Let’s say your total annual car expenses are $13,000. Take this figure and multiply it with your 70% result from our first example. The calculation is as follows: 13,000 x 0.70 = $9,100.

You can now claim $9,100 as a business expense. How awesome is that?

Use Digital Logbook Apps to Log Your Vehicle Mileage

Now, here comes the best part! Accountants have an awesome hack for easy mileage logging. And if you’re going to learn anything from them – let it be this. Use a Digital Logbook App to help you stay sane during the entire tax filing ordeal. Imagine being able to log, calculate, and upload your expenses just by using an app on your phone, easy right?

Remember, in order to keep an accurate logbook you’ll need to state the purpose of the trip, the kilometres travelled, and odometer readings.

This takes time. Plus it requires proper diligence.

The time you spend accurately recording your mileage and expenses will save you from getting in trouble with the ATO by overclaiming your expenses. A bit of lousy record-keeping and you could have an inaccurate logbook before you know it.

That’s exactly why Aussie accountants use an ATO logbook app to track their car expenses. Getting your money back this tax season has never been easier.

If you can handle a few swipes on your smartphone, you can track your mileage and car’s expenses.

Leverage Your Knowledge and Do It Like A Pro

Everything about keeping a vehicle logbook is painful. Wrapping your head around the ATO tax rules then logging your trips each day for 12 weeks – it’s all a pain in the neck.

But now you know how to keep a vehicle log book, you might as well leverage this knowledge to your advantage.

We made sure to let you in on some useful accountants’ hacks to make your mileage logging as painless as possible.

Want to make your tax time less stressful? Enter GOFAR. It’s an all-in-one logbook app that automates the logbook keeping process for you.

The makers of GOFAR made sure you get the most out of their logbook app, so here’s what’s included:

  • Accurate trip logging. Never miss a trip again with GOFAR. The app works alongside a set-and-forget adaptor that remembers to track every trip even if you don’t.
  • Easy trip classification. Swipe left or right to classify your trips as business or personal. It’s as easy as that.
  • ATO-compliant reports. View your claim totals at any time and export your spreadsheet reports to the ATO in seconds.
  • Filtered or full exports. Browse the full year of your drive logs and select the busiest 12-week period to maximise your tax deductions.

Take a peek at how others stepped up their tax savings with GOFAR then take advantage of the app yourself.

It’s a one-off purchase with a money-back guarantee. So you get your money back either way: by getting it back on taxes or by getting it back if you’re not satisfied with the app. It’s a win-win situation.

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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