5 Vehicle Logbook Hacks Every Accountant Wishes You Knew

Photo: Katemangostar

Does your line of work require you to spend plenty of time at-the-wheel? If so, then you should definitely look into the vehicle logbook method. This method allows you to claim all car expenses you incur while on duty.

Although many Australians know that this goose can lay the golden egg, they still don’t use it. “It’s mind-numbingly tedious” and “it’s too time-consuming” are both stock answers you may hear.

Yet, you can earn easy money by getting your records right and claiming the largest refund possible. Knowing the vehicle logbook rules will carry you a long way. And we mean this both literally and metaphorically.

We bring you 5 vehicle logbook hacks every accountant wishes you knew. We’ll take a peek at their side of the fence to see how they keep a logbook for tax return purposes.

Hack #1: Learn How You Can Benefit From the Vehicle Logbook Method

What accountants want you to know first is that you can maximise your tax refund if you provide substantiation for your business mileage.

Keeping a logbook is a fail-proof way to document your drives and provide evidence of your car expenses to the ATO

Note that you’re only able to claim the expenses you incurred while conducting your business activities. The purpose of the logbook is to separate your business and personal costs so you’re able to work out your claim.

So you want to claim your work-related car expenses? You can’t – well, not until you figure out whether you’re eligible. You can hope for a deduction if:

  • You’re a sole-trader
  • You’re an employee
  • You run a company or a trust

In each of these cases, you can claim expenses for cars that are privately or company-owned.

Do your annual car expenses exceed $3,400? If you’re not using the vehicle logbook method then you’re selling yourself short.

Get a logbook and start recording your drives as business trips. Trust us, it’s worth your while.

Head over to this link to uncover which car expenses you can claim as a business expense.

Hack #2: Keep to the 12-Week Logbook Period Rules

For what it’s worth, keeping to the rules will get you a bigger tax deduction and keep you on good terms with the ATO. You don’t want to mess around with the taxman, do you?

There are a few simple logbook method rules to follow:

  • You need to keep a logbook for 12 continuous weeks. If you don’t finish your logbook period in the first financial year, it can cross over to the next financial year.
  • The logbook is valid for up to five years.
  • You need to start a new logbook if your business circumstances change or if you replace your car.

After the 12-week period, you’ll get an insight into your percentage split between business and personal mileage. To illustrate – let’s say your car costs during the logbook period were $5,000 and your business percentage was 70%. The amount you could claim would be $3,500.

Nifty, right?

Bonus tip: Always make sure you obey the letter of the law. The ATO may check with your employer whether your job requires you to use the vehicle for business.

Note also that you’re NOT eligible for car expenses if the car is provided by your employer or it’s part of your salary package.

Hack #3: Know What to Record in a Vehicle Logbook

Speaking of the 12-week logbook period, this is how it looks in practice. To lodge your tax return at tax time, you need to capture the following trip details every time you drive. This applies to both business and private trips:

  • Date of the trip
  • Odometer readings at the start and end of the trip
  • Your mileage for that trip
  • Reason for the trip

If your car has a trip meter, it will record the mileage for you. Otherwise, you’ll need to extract the kilometres travelled from your odometer readings.

See? It’s not so complicated (although you can see why people would consider it a chore).

It’s critical to know the ropes of proper logbook keeping, so here’s one more thing to keep in mind. The vehicle logbook method requires you to:

  • Keep all receipts throughout the year (e.g. registration, insurance, and repairs).
  • Record the odometer readings for the duration of all five logbook years.

Note that it’s not mandatory to keep your fuel expenses receipts. You can calculate these expenses using the start and end odometer readings for the year.

Example of Logbook Method by ATO Tax Rates Info
Click the image to magnify

Hack #4: Watch Out for Inaccurate Mileage Logging

A word of advice any accountant would give you is to do your best to keep a current, accurate, and valid logbook. So, know your rules when claiming your car expenses from the ATO. You’ll be doing yourself a huge favour.

Otherwise, you’re making yourself an easy target for the ATO. They have raised the bar when it comes to tax return auditing. Sophisticated new methods have made spotting a fraudulent claim a no-brainer.

You don’t even need the worst-case scenario. Enough damage is done if your claim is rejected.

A report by the ATO states that about 70% of logbooks reviewed have technical errors. Don’t let it be yours.

Below are some cases of irregular or fraudulent logbooks, so you know what to steer clear of:

  • A taxpayer completed the logbook on the same day using different colour pens.
  • The logbook wasn’t representative of the usual business/private percentage.
  • A taxpayer claimed business mileage for private trips.

Hack #5: Search for ATO-Compliant Logbook Apps

Nearly everyone experiences time scarcity nowadays, and you don’t always have money to burn. Which is why a hefty tax return can come in handy.

Yet, keeping a vehicle logbook requires time and diligence.

Things get more complicated when you need to record your trips and you’re flat rundown at the end of the day.

And here’s the other side of the coin: If you choose NOT to record your mileage, you’re missing out on valuable tax deductions. And this happens each time you visit a client site, attend a meeting or collect supplies for your business.

Now, here’s the best part! If these were sole barriers for you to claim your car expenses, imagine if they didn’t exist. Might that change things for you?

An ATO logbook app can remove all the logbook keeping problems that get in your way.

Save Time and Money with GOFAR

The 5 vehicle logbook hacks above will change the way you complete your tax return for good. With a little insider information, now you’re able to save money on taxes and save the time you’d otherwise spend on dreary logbook keeping.

This is where GOFAR jumps in. Instead of spending hours on filling in your trip details manually, let GOFAR do the legwork for you. The app uses GPS technology to record your odometer readings and kilometres travelled. And not only that. The app:

  • Automatically records each trip. GOFAR comes with an OBD2 port device that tracks each trip, even if you don’t have your phone on you.
  • Classifies business trips in seconds. All you need to do is sit and drive and when the trip is over, just swipe left or right to classify it as business or personal. It’s as simple as that!
  • Lets you choose the best logbook window. Choose the 12-week period with the most business activity to boost your tax refund.
  • Lets you capture an unlimited number of trips. Unlike other apps, GOFAR is a one-off purchase, so there are NO subscriptions.

Now, both time and money are currencies you no longer need to waste. So, go on and learn more about how GOFAR can simplify your tax return.

Get the app now to start getting your money back on taxes ASAP!

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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