What is the logbook method for car deductions in Australia?
The logbook method is a common way in Australia to calculate the business-use percentage of your car expenses for tax deductions. It requires keeping a detailed logbook for at least 12 continuous weeks to determine the ratio of business to private travel.
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How it works in practice
Understanding the Logbook Method
The logbook method is one of two primary ways individuals in Australia can claim car expenses for tax purposes, specifically designed for those who use their vehicle for both work and personal travel. It allows you to calculate the precise percentage of your car's use that is for business, enabling you to claim a corresponding portion of all car-related expenses.
How it Works
To use this method, you must maintain a physical or electronic logbook for a continuous period of at least 12 weeks. During this period, you record details for every trip, including the date, starting and ending odometer readings, the purpose of the journey, and the kilometres travelled. This 12-week period establishes your business-use percentage, which can then be used for up to five years, provided your travel patterns remain consistent. You can claim all car expenses including fuel, oil, repairs, maintenance, registration, insurance, and depreciation, multiplied by your calculated business-use percentage.
Important exceptions
The logbook method is typically for individuals. If your employer provides a car, or if you only make incidental business trips, other methods or fringe benefits tax (FBT) rules might apply. If your business use changes significantly, you'll need to complete a new logbook. The method does not apply to motorbikes or vehicles with a carrying capacity of more than one tonne or nine passengers.
What you should do now
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Keep a detailed logbook for 12 continuous weeks, recording all trips (business and private).
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Calculate your business-use percentage by dividing business kilometres by total kilometres during the logbook period.
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Keep accurate records of all car expenses, including fuel, maintenance, insurance, and depreciation.
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Use the calculated business-use percentage to claim the relevant portion of all car expenses in your tax return.
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Retain your logbook and all expense receipts for at least five years in case the ATO requests them.
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