Is it your Logbook Anniversary?
If you drive your car for work or business purposes, and want to claim a tax deduction, you must complete a valid logbook every five years; or sooner, if your typical business use has varied by more than 10%.
FBT legislation also requires a logbook, to ascertain the private versus business usage for all cars and many Utes that cost more than the luxury car tax threshold, or that don’t satisfy the ‘workhorse vehicle pre-requisites’.
What is a valid logbook?
The ATO is very specific about what constitutes a valid logbook. Many logbooks fail under audit, due to lack of trip description, missing or incorrect odometer readings and/or insufficient weeks.
A compliant logbook must record the following for every trip:
- vehicle make, model and registration number,
- when the logbook begins and ends,
- the odometer reading at the start of the trip,
- the odometer reading at the end of the trip,
- the number of kilometres travelled for each journey,
- the reason for the trip (the business purpose) or ‘private/pte’
The logbook must be kept over a continuous 12-week period and must be ‘typical’ of your usual work patterns/travel. A logbook can be transferred between vehicles, if the business usage is similar, and the logbook only applies to one vehicle at any one time.
Common errors
Error: Insufficient trip descriptions - ‘Business’; ‘client’; ‘work’; ‘Lynten’
Correct: Accepted business/work reasons – ‘to town for parts’; ‘visit client for quote’; ‘to back paddock – fencing’; ‘to other farm - pump repairs’
Error: Logbook period only 6, 10 or 11 weeks
Correct: Must be for continuous 12-week period
Error: Odometer readings don’t agree e.g. last trip’s closing odometer reading - 95120; next trip’s opening odometer reading - 89175
Correct: Ensure every trip, both business and private, are recorded during that 12-week period
Error: Major change in business usage – like change jobs/retire/sell business or farm and/or markedly reduce business activity; and don’t complete a new ‘typical’ 12-week logbook period.
Correct: Complete a new full 12-week continuous logbook when business usage varies by more than 10% or every five-year anniversary, whichever earlier
Error: Forget to record the odometer reading at the beginning of every financial or FBT year.
Correct: Mark your calendar with a recurring 12-month reminder – ‘record od. reading’
The ATO are getting smarter
Logbooks are on the ATO’s radar. The ATO now has extensive data matching capabilities and can access tolls and social media pictures to review your logbook against actual trip destinations. They’ve been known to use handwriting experts and forensic document experts to verify the authenticity of the logbook e.g. if a logbook has been written in one sitting. And if an App, Word document or Excel spreadsheet has been used as the sole logbook record, they can access the audit trail, to assess what dates the entries were recorded.
Tax deductions and/or FBT savings for vehicle claims can be substantial and a valid logbook, along with the necessary expense substantiation, are vital forms of verification. Is it your Logbook Anniversary?
