Whether you are an employer, employee, or sole trader, with the increase in ATO scrutiny, and their ability to data match with state and territory motor vehicle registry authorities, it is important to understand the requirements when it comes to using the logbook method to claim motor vehicle expenses. Your logbook must:
- Cover at least 12 continuous weeks, and be broadly representative of your travel,
- include the destination and purpose of every journey, the odometer reading at the start and end of each journey, the total kilometres travelled during the period, and
- include odometer readings for the start and end of the logbook period.
Your logbook is valid for 5 years. However, if your circumstances change (for example, if you change jobs or move to a new house), and the logbook is no longer representative of your work-related use, you will need to complete a new 12-week logbook.
In each of the 4 years following the first year, you need to keep:
- Odometer readings for the start and end of the full period you claim (this is often overlooked), and
- your work-related use percentage based on the logbook.
Under the logbook method, you can claim running costs and the decline in value of your car, but you must keep a record of the purchase price of the car and receipts for all of your running costs. A record of your reasonable estimate of fuel and oil may be kept based on the odometer readings for the start and end of the period for which you are claiming.
There are various logbook apps available; however, a simple manual logbook will suffice. Whilst this information may be tedious to maintain, without it you may be forced to use an alternative method which may not result in an optimum tax outcome.
