08 November, 2021

How to keep a car log book - ATO rules

To receive reimbursement in Australia, you need to keep a compliant car log book that will serve as proof that you have driven the said km for business purposes. In general, if you use your car frequently for work, the car logbook method will result in a larger tax refund than the cents per kilometre method. 

Using a logbook allows you to claim a percentage of all of your car expenses (fuel, registration, maintenance, interest on loans etc.) The other method of claiming car expenses (cents per kilometre) allows you to claim a fixed rate for only fuel.

Car log book options 

There are a couple of car log book options out there. The most classic option is the physical logbook which you can purchase online or from various supply shops. Nowadays, a lot of people use spreadsheets, Excel files and PDF files as a logbook. Using a digital log book is definitely preferable nowadays as it is less likely for you to lose your log book than if you were using a physical log.

The option of using an app as a car logbook is growing in popularity as it helps you spend a lot less time logging trips, reviewing and inputting data manually. The digital log book nowadays does most of the work for you. 

If you are an employer or a manager, the log book app option may be the best choice for you as it will allow you to quickly review and validate your team’s reimbursement claims with easy workflows for submitting and approving mileage. You will also be able to receive accurate and consistent mileage reports from your team, as well as get an overview of your team’s status easily.

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How to fill out an ATO compliant car logbook 

In order to make sure your log book is compliant, there are a few things that you must never forget to fill out as they can cost you your whole reimbursement.

Make sure to record:

  • when the logbook period begins and ends 
  • the total number of kilometres travelled by car during the logbook period
  • the number of kilometres travelled for each journey 
  • the odometer readings at the beginning and end of each subsequent income year your logbook is valid for 
  • the business-use percentage for the logbook period 
  • the vehicle's make, model, engine capacity, and registration number
  • the odometer readings of the car at the start and end of the logbook period 

Keep in mind that each logbook you have is valid for five years, but you can start a new one at any time. If you use a logbook app, it is likely that a lot of this information will be logged automatically. 

It's critical to keep track of every trip you take in your car for 12 weeks, not just work trips. If you fail to do so, the ATO will consider your logbook invalid and may reject all of your car expense claims.

Is the car log book method very time consuming? 

The car log book method might take quite a lot of time, depending on how many trips you take. However, using an app to log your trips should reduce the time you spend on it significantly. By using a mileage tracking app, you don’t have to log your trips anymore as the app can do it automatically for you. 

How long can I keep a car log book for? 

You only need a logbook once every 5 years. You can use that logbook for five years' worth of tax returns as long as your driving habits remain consistent year after year.

As a result, the car logbook method is extremely convenient to use. Even if you buy a new car during that five-year period, you can keep using the old logbook as long as your work-related use hasn't changed.

Calculate your reimbursement with the car log book method

If you want to figure out how much you can claim when using the logbook method, you can try the following method for estimating your reimbursement. 

  • To begin with, make sure you are keeping an accurate car log book
  • Calculate your business-use percentage by dividing the total distance travelled by the distance travelled for business and multiplying by 100.
  • Total your car expenses for the fiscal year.
  • Multiply your total car expenses by your percentage of business use.

To do this, you need to make sure you have kept an accurate car log book, and that you have all records of any fuel, maintenance or other relevant expenses. 

It's simple to calculate your business use percentage and provide evidence as required by the ATO if you keep a car log book. It's critical to keep track of every trip you take in your car for 12 weeks, not just work trips. If you fail to do so, the ATO will consider your logbook invalid and may reject all of your car expense claims.

Let us know if you have any questions about keeping a car log book. 

Not located in Australia? Find out how to keep a logbook in the UK, US or Canada