Working the ATO Logbook Method with a Car Expenses Cheatsheet

Do you use your personal car for business most of the time? If so, the ATO logbook method will help you boost your tax refund.

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How does the GOFAR app help you claim more?

The more you drive for business, the more you’re eligible for reimbursement.

So, this is a heads-up to plumbers, electricians, painters, clergy, florists, and other Australian professionals who spend their day travelling between clients: you can get $4,250 plus back on your tax return.

Yet, when it comes to calculating the logbook method, it’s super important that you do it correctly. As long as you have your paperwork in order and a car log book template you’ll have nothing to worry about.

The ATO will be able to process your claim.

The problem is, it can be hard to wrap your head around all the complex logbook keeping rules, especially as the cents per km rates change each year.

By reading this article, you will learn:

1. When multiple owners jointly share a car for business purposes, each individual can make separate claims for their expenses under the cents per kilometre method.
2. A trip is considered business-related by the ATO only when you assign a particular purpose to it.
3. You can deduct all your business-related car operating expenses, including car depreciation with the ATO logbook method.

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 work it out.

In summary…

The largest deduction the cents per kilometre method can yield in the 2023-2024 income year is $4,250.

That’s a fixed rate of 85 cents per kilometre, up to a maximum of 5,000 kilometres, 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 in detail. Then, you can decide which one better suits your circumstances.

Method 1: Cents Per Kilometre Method

If you use the cents per kilometre method to claim your work related car expenses, you can claim a fixed rate per kilometre. For the cents per km rate for the 2023-2024 tax year, is 85 cents.

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 separately.

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-compliant logbook app such as GOFAR to do this.

Best electronic log book going around and made even better by being Australian made. I’m super impressed with how much this app does and how easy to use it is. John Lisle, Verified Customer, Jun 2021

Method 2: The ATO Logbook App Method

Importantly, the ATO approved logbook app method allows you to claim your actual work-related car expenses.

The reimbursement amount can be larger, but just as it usually goes with great pay-offs, it can require more effort.

To claim a deduction for motor vehicle expenses ATO 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.

The table below compares the logbook method and the cents per kilometre method using various criteria, to help you choose the best one for your needs.

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

Key Records You Should Keep to Claim Deductions

Now that you know how the two ATO methods work, let’s focus on what it takes to create accurate, compliant records.

There’s no two ways about it, it’s the only way to avoid facing penalties 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 details of keeping a logbook for your car in terms of 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 business kilometres you covered on each journey

Need an Old-School Paper Version? Download this free Vehicle Log Book template and record the:

• 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.

The table below highlights some trip examples and tags each one as either tax deductible or not.

The information provided above can help you avoid committing common mistakes when claiming ATO deductions.

For example, if a nurse works at a hospital and then does freelance health consulting from home, can they claim the trip from the hospital to their house, since travelling between two jobs is tax deductible?

In this case, the nurse cannot claim the trip. The ATO stipulates that to claim a trip between two jobs, it must be between two workplaces; your home doesn’t count.

Download your vehicle logbook template here.

Figuring Out Your Deduction Amount

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, use a simple ATO tax calculator to perform a simple calculation: take your business kilometrage and divide it by the total kilometres 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.

Keeping a Valid Car Logbook to Maximize Deductions

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 kilometres as long as you paid for the expenses yourself and weren’t already reimbursed for them.

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

1. You need to keep the logbook for 12 weeks in continuation.
2. 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”.
3. The logbook period must reflect your annual use of the car.
4. If you’re keeping the logbook for two or more cars, you should log them during the same time frame.
5. You need to keep odometer records during the “non-­logbook years” as well.

Some mistakes that disqualify people from obtaining deductions include having incomplete log entries, not maintaining the logbook for the required continuous 12-week period, and failing to keep all car expense records.

You can avoid making similar mistakes by:

• Making it a habit to record your trip immediately after each trip or simplify this by using a logbook app
• Using reminders to help you stay on track and record trips during the 12-week period
• Getting a dedicated folder or digital storage for all car expense receipts

In a nutshell, this is the step by step process you need to follow for the ATO logbook method:

1. Choose a continuous 12-week period that’s representative of your yearly travel.
2. Record both business and personal trips including, the date, specific trip purpose, and start and end odometer readings.
3. Update the logbook regularly, after each trip.
4. Compile all car expense receipts including fuel, maintenance, and insurance.
5. Calculate the business-use percentage.
6. Multiply your car expenses by the business use percentage.
7. Maintain the logbook for future use.

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

Not knowing the nuts and bolts of the ATO logbook app 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 kilometres– 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

This truly is a brilliant device and app. I’ve been using it for years now and it helps me track my car’s health and allows me to track business and personal rides. Extremely useful!!! Jaap Bijl, Verified Customer, Apr 2021

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

Frequently Asked Questions

Who’s allowed to use the logbook method?

You can only use the ATO logbook method if you’re a sole proprietor or in a partnership—where at least one partner is an individual—claiming work-related car deductions from the ATO.

Do I need to fill a new logbook often?

No. Once a logbook is filled, it’s valid for 5 years.

When you use a logbook from an earlier year to establish your business percentage, you must maintain that logbook and record odometer readings in the ensuing years.

However, you can begin a new logbook at any point. For instance, if the way you use your vehicle changes, like if you change your job role, you’ll need to begin a new logbook.

If it’s the first time you’re using the logbook method, you’ll need to log your trips for a minimum, continuous 12-week period.

The 12-week period during which you log trips must be representative of your travel throughout the year.

What types of expenses can I claim using the logbook method?

You can claim the following expenses:

• Registration
• Fuel and oil
• Maintenance costs i.e., repairs and servicing
• Motor vehicle loan interest
• Lease payments
• Insurance cover premiums
• Depreciation

What Next?

Now that you’ve settled on the ATO logbook method, consider our selection of GOFAR subscriptions.

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