Car Expenses Cheat Sheet: Working the ATO Logbook Method

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Do you use your personal car for business most of the time? If so, the ATO logbook method can help you boost your tax refund. The more you drive for business, the more you’re eligible for reimbursement.

So, heads-up to plumbers, electricians, painters and other professionals that spend the day navigating between clients: you can get a decent amount of money back on your tax return.

Yet, when it comes to the logbook method, it’s critical to do it right. As long as you hold up your end of the bargain, you have nothing to worry about. The ATO will follow suit.

The problem is, it can be hard to wrap your head around all the logbook keeping rules. It sounds like a lot to take in from the get-go. But don’t sweat it! We’ll walk you through it step by step.

Below is your logbook method car expenses cheat sheet.

Is the ATO Logbook Method the Right Choice for Me?

You may be wondering: which method is right for you – cents per kilometre or the logbook method. So let’s cut straight to the chase.

The largest deduction the cents per kilometre method can yield (in the 2019-2020 income year) is $3,400. There’s a fixed rate that you can claim on each kilometre driven for business.

The logbook method, on the other hand, will help you work out the business­‐use percentage of your car. Since the method is based on claiming a part of your actual expenses, it can give you a bigger tax deduction.

This especially holds true if you’re using your car for business on a regular basis. Note, however, that the logbook method does require you to maintain a logbook and keep receipts.

Now, let’s explore the two methods. Then you can decide which one better suits your circumstances.

Cents Per Kilometre Method

If you use the cents per kilometre method to claim your expenses, you can claim a fixed rate per kilometre. For the 2019-2020 tax year, this rate is 68 cents per kilometre.

You can claim a maximum of 5,000 business kilometres per car using this method.

If you share a car with another joint owner and use it for your business, each person can claim their expenses.

This method doesn’t require you to keep as much documentation as the logbook method. A word of caution though – you still need to provide evidence to the ATO to prove these are business kilometres.

You can keep a diary of records or use an ATO logbook app to do this.

The ATO Logbook Method

Importantly, the logbook method allows you to claim your actual work-related car expenses. The pay-off is greater, but just as it usually goes with great pay-offs, it requires more effort.

To claim a deduction for work-related car expenses using the logbook method, you need to keep:

  • A paper-based or electronic logbook
  • Receipts of your actual fuel and oil costs (alternatively, you can calculate this using your odometer readings)
  • Receipts of all your running car expenses

As a result, you can claim all your business-related car running costs as well as car depreciation. What you CAN’T claim is capital costs for car purchases or loans.

Check out this article to learn when you can and when you can’t claim your car expenses.

What Information Should I Record

Now that you know how the two ATO methods work, let’s zoom in and see what it takes to create accurate, compliant records.

There’s no two ways about it, it’s the only way to avoid crackdown due to inaccurate tax record keeping.

In a similar vein, sticking to the ATO logbook method and keeping to the rules is a surefire way to get a solid amount of money back on your taxes.

So, let’s get down to the nitty-gritty of logbook keeping. This is what you should record in your logbook:

  • Start and end dates of the logbook period, with odometer readings
  • The kilometres you travelled in total during the logbook timeframe
  • The mileage you covered on each journey

Now, this is the information you need to record for each trip during the logbook period:

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Download Free Vehicle Log Book
  • Start and end date of your trip
  • Start and end odometer readings for each trip
  • Kilometres travelled
  • Reason for the trip

The ATO will regard a trip as business-related only if you attach a specific purpose to it. Stating it was “business” or “miscellaneous business” is not enough. Instead, use more specific phrases such as “client meeting”, “buying business supplies”, etc.

Download your vehicle logbook template here.

How Do I Figure Out the Amount of My Deduction?

Now onto some number crunching.

You want to calculate your business use percentage to figure out your claim, right?

Once you’ve completed your logbook and have all the details at hand, perform a simple calculation: take your business mileage and divide it by the total mileage driven during the logbook period. Then multiply the result by 100.

Now that you’ve figured out your business use percentage, it’s time to compute the actual amount you can claim. This is how you do it:

  • Add up your total car expenses for the logbook period (using the receipts you kept)
  • Multiply your total car expenses by your business-use percentage

Or, let the ATO work-related car expenses calculator do the calculation for you!

How Do I Keep a Valid Car Logbook

The ground rule of claiming car expenses is that you’re eligible only if you’re using your own vehicle for work. In addition to that, you’re allowed to deduct your business mileage as long as you paid for the expenses yourself and weren’t already reimbursed for them.

Take a look at this article if you want to learn more about what car expenses are tax-deductible.

But now let’s get to the meat of the matter of keeping a valid logbook.

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GOFAR makes logging miles easy. Available For iPhone and Android
  • You need to keep the logbook for 12 weeks in continuation.
  • Once you’ve completed the logbook, it’s valid for five years. When that period is over, you’ll have to keep another one. The first year of logbook keeping is referred to as the “logbook year”. The remaining four years are referred to as “non-­logbook years”.
  • The logbook period must reflect your annual use of the car.
  • If you’re keeping the logbook for two or more cars, you should log them during the same time frame.
  • You need to keep odometer records during the “non-­logbook years” as well.

Use an App Like GOFAR to Make Claiming Your Car Expenses a Breeze

Not knowing the nuts and bolts of the ATO logbook method will render your efforts to claim your tax return worthless. Inaccurate record-keeping can get you in trouble with the ATO. And if they reject your claim, forget about that handsome tax refund.

Luckily, you now know how to play by the rules, so this doesn’t apply to you.

And now that large tax refund is just around the corner. Put in a little effort, and it’s yours.

And of course, you don’t need to use pen and paper to log your mileage – that format is a relic of a bygone era. Instead, you should use an app like GOFAR, because it will allow you to easily claim your car expenses as you go along.

You won’t have to log each trip manually every time you get into your car – it’s on GOFAR now.

GOFAR developers went the extra mile to hone their competency so they could meet the needs of modern car owners. The app now makes the tax return of work-related car expenses dead simple. It:

  • Automatically records every trip
  • Classifies business trips in seconds
  • Records everything. You only need to choose the best 12 week period within which to claim
  • Immaculate records safeguard you against the ATO crackdown

Ready to make the leap to simplified tax return lodging? Get your hands on the GOFAR app today!

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

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