Car Expenses and Logbooks

How to maximise your tax deduction

When claiming a deduction for work-related Motor Vehicle expenses, many taxpayers miss out on maximising their claim due to inadequate record keeping.

To maximise the deduction for Work Related Car Expenses, taxpayers should maintain a Motor Vehicle log book record.

Without a valid log book, your Accountant will be limited in the methods available for calculating your claim.

What is a Motor Vehicle Expenses log book?

A Motor Vehicle log book is a document which records information detailing your work-related travel and other information that your Accountant may require when preparing your Car Expense tax deduction.

Where can I get a Car Expenses log book?

  • purchase a complying Log Book from an office supplies store
  • download a complying Log Book App for your smartphone
  • keep log book records in your work diary
  • keep log book records in another format of your choice (e.g. computer spreadsheet, hand-written notes)

What information must my logbook contain?

  • the start date and finish date for each work related travel journey
  • an odometer reading at the beginning and end of each trip
  • a description of the purpose of the work related travel
  • the date that the logbook sample period started
  • the odometer reading at the start of the log book period
  • the date that the logbook sample period ended
  • the odometer reading at the end of the log book period
  • the total work-related kilometers travelled during log book period
  • the percentage of business use for the log book period (business km’s divided by total km’s)

How long do need to keep a log book for?

A log book must be maintained for a minimum continuous 12 week period in the first year that you intend to make a claim for work-related car expenses using the log book for substantiation. If your pattern of usage is stable,  the log book business use percentage can be used to substantiate your claim for another for years (i.e. 5 years in total) before you have to prepare a new log book.

If you use more than one car at a time, you should keep a log book for each car.

Although your log book can be used for five years, it is important to remember that you must collect additional information pertaining to your annual usage each year.

Don’t forget that (as with all tax records) taxpayers must keep details to substantiate Car Expense tax deductions for a minimum of 5 years. So you may need to keep that logbook in a safe place for up to 10 years. It may be a good idea to scan a copy and email it to your accountant with your other tax records.

What information will I need to collect each year?

  • the odometer reading of your car at the beginning and end of each financial year
  • your log book business use percentage
  • details of your car and purchase price (e.g. purchase contract showing car details, date of acquisition, total cost inclusive of transfer fees)
  • details of any finance for your car (e.g. loan or hire purchase agreement)
  • details of operating expenses incurred for the year (e.g. fuel, registration, insurance, services, etc)
  • details of any major repairs or improvements for the year (e.g. after-market accessories fitted)
  • the size of your car’s engine (i.e. engine capacity – e.g. 2.0 litre)

The information detailed above is only intended as a general overview and may not be relevant to your particular circumstances. Please contact us for specific advice with regard to your personal situation.