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Logbook Requirements

Logbook Requirements

Daniel Pegdon      Varun Kumar      

In most cases, having a valid car logbook is beneficial for both claiming a personal tax return deduction for work related travel cost using your own car, and calculating the taxable value of a car fringe benefit, when the car is provided by an employer.

As record keeping requirements in this area are strict, we believe it is a good opportunity for us to detail and remind you of your record keeping requirements.
 
Logbook requirements
A separate logbook must be kept for each vehicle for a continuous 12-week period and must document:
  • When the log book period begins and ends.
  • The car’s odometer readings at the start and end of the logbook period.
  • The total number of kilometres the car travelled during the logbook period.
  • The number of kilometres travelled for each journey.
  • The odometer readings at the start and end of each subsequent income year your logbook is valid for.
  • The business-use percentage for the logbook period based on the business use of the vehicle.
  • The make, model, engine capacity and registration number of the car.

The 12-week period may overlap two income/FBT years provided it includes part of the year. In general, a logbook will be valid for five years assuming business use is consistent throughout this period.
 
What needs to be recorded in a logbook?
For each trip, the following must be recorded:
  • The date the trip began and ended
  • Odometer readings at the start and end of each trip
  • Kilometres travelled during the journey
  • The purpose of the trip

These entries must be made as soon as possible after the trip. Simply stating ‘business trip’ may not suffice as the ATO require more detailed information in relation to the journey to establish whether the purpose of the trip was for business or private purposes. It is best practice to include further details (e.g. name of client, supplier etc.).
 
If the 12-week period is not representative of the whole year, you may have to adjust your business percentage (i.e. upward or downward). If your pattern has changed substantially during the year, the logbook may no longer be valid, and you may need to keep a new log book.
 
Is travel from home to work business related?
It should be noted that except in limited circumstances, a trip that starts or ends at your home is generally considered private in nature. Some examples in which a journey that starts or ends at home that may become business related includes:
  • Home is your place of business (this does not include a home office).
  • Carrying essential bulky tools and equipment that cannot be stored at your worksite.
  • Travelling to or from an alternative place of work.
In the event of an Australian Taxation Office (ATO) review/audit, a copy of the log book will ordinarily be required to be provided as part of substantiating your business usage and ensuring you hold a valid log book is critical to supporting your claim.

Impact of COVID-19 on new log books
Due to the impact of COVID-19 on the business usage of vehicles, the ATO has released guidance on the impact of restrictions on new log books which allow individuals to make a reasonable estimate of the business use to account for changes in driving patterns.
 
An employer uses the operating cost method to value their car fringe benefits, and the 2020 FBT year is a logbook year. They begin maintaining a logbook on 2 February 2020, meaning the logbook must run for at least a 12-week continuous period to 26 April 2020.

However, from early April, in response to the COVID-19 pandemic, the employees' car usage changes significantly, and there are few or no business journeys for the final four weeks of the logbook period.

When estimating the business use for the 2020 FBT year, the employer may adjust their estimate to reflect the business journeys recorded in the period of the logbook before COVID-19 impacted driving patterns, to ensure it is a reasonable estimate of the business use across the FBT year.

It is crucial however that a log book is maintained for a continuous 12-week period to be able to reasonably estimate business journeys.

Final words
You are able to utilise Mobile device Apps to assist you  provided they satisfy all the requirements in being able to calculate business usage on trips over a 12-week period (as outlined above). The ATO have an App, ‘myDeductions’, which may assist you in meeting these requirements.
 
More information
If you require assistance or would like to learn more about log book requirements, contact your local Moore Australia advisor today.
 
ATOLogbook Requirements