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What we have been noticing here at Freshwater are that lots of clients are tracking their car costs, BUT not necessarily keeping the appropriate records / receipts not a log-book.

When it comes to claiming motor vehicle expenses, maintaining accurate records is KEY. One of the most effective ways to do this is by using a logbook. Not only only this though, if you:

Select the Logbook method to claim your car expenses
Claim a large number of K’s (in excess of 5000)
Claim depreciation on your car
Run a business that makes use of a car

Then, the ATO requires you to have kept a logbook. If you don’t have one, then you won’t be able to make use of the logbook method to claim your car expenses, which will often mean a significantly reduced tax deduction.

The Logbook Method – more info
The logbook method is a detailed and accurate way to claim motor vehicle expenses for business purposes. When you have done a great deal of car travel for work; often this particular method of claiming your car expenses will often result in a greater tax deduction than the cents per KM method, which caps your total claim at 5000K’s (a tax deduction of $4,400 within the 2024 financial year).

Why Use a Logbook?
A logbook is essential for several reasons:

Accurate Record-Keeping: A logbook helps you keep detailed records of your business-related travel. This is important because you can only claim the portion of your motor vehicle expenses that are used for business purposes.

Compliance with ATO Requirements: The ATO have specific requirements for what needs to be recorded in a logbook. These include the start and end dates of the logbook period, odometer readings, and details of each journey.

Maximising Deductions: By accurately recording your business travel, you can ensure that you are claiming the maximum allowable deductions. This includes expenses such as fuel, oil, repairs, servicing, and even depreciation of the vehicle.

Simplified Tax Filing: Having a well-maintained logbook simplifies the process of sorting your tax! It provides a clear and organised record of your business-related travel, making it easier to calculate your deductions and substantiate your claims if audited.

What to Record in Your Logbook
Your logbook must contain the following information:

The start and end dates of the logbook period
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 reason for each journey (business or private)
The make, model, engine capacity, and registration number of the car

Logbook Timeframe
If you are using the logbook method for the first time, you must keep a logbook for at least 12 continuous weeks during the income year. This period should be representative of your travel throughout the year. Once established, a logbook is valid for five years, provided you maintain odometer readings at the start and end of each subsequent income year.

Using Apps to Assist with Logbook Maintenance
There are several means available to simplify the process of keeping a logbook…

myDeductions Tool in the ATO App: Sole traders can use the myDeductions tool in the ATO app to create a logbook and record business-related car trips. This tool allows you to keep electronic records, making it easier to track your expenses and ensure compliance with ATO requirements.

Other Logbook Apps: There are various other apps available that can help you maintain a digital logbook. These apps often come with features like automatic trip detection, GPS tracking, and easy categorization of trips as business or private. Some popular options include TripLog, MileIQ, and Driversnote.

Conclusion
Using a logbook for motor vehicle claims is not just a good practice; it is a necessity for accurate record-keeping and maximising your tax deductions. By adhering to ATO guidelines and leveraging modern apps, you can simplify the process and ensure that you are fully compliant with tax regulations.

Start maintaining your logbook today to make your tax filing process smoother and more efficient! If you need help, get in touch with our team.

Here at Freshwater, we would like to see far more of our clients obtain the tax benefits that keeping a log books provides.

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