Should your employment require you to utilize your private motor vehicle for a range of business activities eg visiting client sites, travel between locations, sales calls etc then keeping a vehicle logbook can be a great way to ensure your achieve the maximum motor vehicle tax deduction in your tax return. Everyone struggles with the costs of running a car. Fuel prices are always going up and down, maintenance costs are continually rising, and then there are the obligatory registration and insurance fees. A vehicle logbook is a simple way to document your business related car expenses; using one could save you a lot of money come tax time.
What is Vehicle Logbook?
A vehicle logbook is a record of the total number of business kilometers you have travelled over a minimum of a 12-week period. Throughout this 12-week period, you have to document every business related journey that you make in your car. The actual business kilometers for the 12 weeks are then divided into the total kilometers travelled in that 12 week period thereby providing an actual business use percentage. Come tax time this business use percentage can be applied to the total cost of running the vehicle for the year with the resulting amount claimable in your tax return.
For instance, say you travelled a total of 4,000 kilometers during the 12 week log book period and during that time approximately half of your vehicle usage was for business purposes then you are be entitled to claim 50% of your car operating costs in your tax return. So, if your total vehicle expenses for the tax year were approximately $10,000 then, you can claim 50% of your total costs, based on the business to total costs ratio.
Where Can I Get a Vehicle Logbook?
You can purchase pre-printed vehicle logbooks at most stationary stores, such as Officeworks. Alternatively, you can make your own. You just need to make sure that you create space for all the relevant information.
To make life easier for you, Online Tax Australia has a vehicle logbook template that you can quickly and easily print out.
What Information do I Have to Record In My Logbook?
A vehicle logbook must contain the following information in order for it to be a valid source of evidence to make a claim:
- When the logbook period begins and ends
- The odometer reading at the beginning and end of the logbook period
- The total number of kilometers travelled during the logbook period
- The total number of kilometers travelled for business purposes in the same period
- For each individual journey;
- Start and finishing times
- Odometer reading at the start and finish of the journey
- Kilometers travelled
- Purpose of the journey
- The final percentage of business use for the period
- The make, model, engine capacity and registration of the car.
How Do I Claim My Motor Vehicle Expenses?
In order to claim your motor vehicle expenses, follow these simple steps:
- Using the records in your vehicle logbook, determine what percentage of all your travel was done for business purposes.
- Add up the total expenses, including depreciation expenses.
- Multiply the business travel percentage by the total expenses amount.
- Write the amount in the appropriate claim box on your tax return sheet.
- Ensure you keep your vehicle logbook in a safe place for at least five years. You may be asked to provide evidence for your claim or you may be audited in the future. It also helps if you have previous logbooks when establishing business percentages for future logbooks.
Keeping a vehicle logbook is an easy way to show evidence of your business related motor vehicle expenses and you will definitely end up with more money in your pocket when July comes around. There are a variety of other ways you can claim a tax offset for work related travel expenses and motor vehicle expenses.
How Long is a Vehicle Logbook Valid?
A vehicle logbook remains valid for up to five years, but you can start a new one at any time if your circumstances change. If you use a logbook that was kept in a previous year, to create a business percentage for a new year, then you must keep the old logbook and preserve the odometer readings.
If you want to make a tax claim based on the expenses of two cars, the vehicle logbooks for each of the cars must cover the same period, and this period should represent the business usage for both cars. So, it’s best to record a period during which both cars clocked up the most business related kilometers.
Contact Online Tax Australia:
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If you’ve been searching for a reliable, experienced Australian tax agent, then contact the friendly team of professionally qualified, accountants at Online Tax Australia today:
- Call us on (03) 9852 9051
- Email us at firstname.lastname@example.org
- Visit us at Level 1, 278 High Street, Kew