To keep a motor vehicle logbook for tax purposes in Australia, you must adhere to specific requirements outlined by the Australian Taxation Office (ATO). Here are the key requirements:

1. Eligibility: 

You can keep a motor vehicle logbook for tax purposes if you use your vehicle for both business and private purposes. It is not applicable if you only use your vehicle for personal use.

2. Timeframe: 

The logbook must be maintained for a continuous period of 12 weeks, and it should be representative of your usual travel patterns throughout the year. The 12-week period can start at any time during the financial year, but it is essential to keep the logbook for the entire 12 weeks.

3. Record Keeping: 

You must keep a detailed record of your business-related vehicle usage during the 12-week period. The logbook entries should include the date of each trip, the odometer reading at the start and end of each journey, the total Km traveled, the purpose of the trip, and the business use percentage for each journey.

4. Business Use Percentage: 

For each trip recorded in the logbook, you need to calculate the business use percentage. This is done by dividing the business kilometers traveled by the total kilometers traveled during that trip. The business use percentage is then applied to the total motor vehicle expenses to determine the deductible portion for tax purposes.

5. Accuracy and Consistency: 

The logbook entries must be accurate and reflect the actual usage of the vehicle. It is important to maintain consistency and record all business-related trips during the 12-week period. Any private trips should be clearly identified and separated from business trips.

6. Substantiation of Expenses: 

The logbook is used to substantiate your motor vehicle expenses, including fuel, repairs and maintenance, registration, insurance, and depreciation. Therefore, you should keep all relevant receipts, invoices, and documents related to these expenses as supporting evidence.

7. Renewal: 

A new logbook needs to be maintained every five years or if there are significant changes in your vehicle usage pattern. If you have already completed a valid logbook, you can use it for up to five years as long as your circumstances remain consistent.

Example:

Date: 1st July 20XX
Start Odometer Reading: 20,220 km
End Odometer Reading: 20,500 km
Total Km Traveled: 280 km
Business Purpose: Travel to work carrying bulky tools

Calculation of Business Use Percentage:

Business Km Traveled: 175 km
Business Use Percentage: (175 km / 280 km) x 100% = 62.50%

Based on this logbook entry, the trip on 1 July 20XX was for travel to work carrying bulky tools, with a total distance traveled of 280 Km. Of the total distance, 175 Km were for business purposes.

This business use percentage of 62.50% can then be applied to the total motor vehicle expenses incurred during the financial year to determine the deductible portion for tax purposes. For example, if the total expenses for the year were $5,000, the deductible amount for this trip would be calculated as:

Deductible Amount = Total Expenses x Business Use Percentage
Deductible Amount = $5,000 x 62.50% = $3,125.00

Therefore, $3,125.00 of the total motor vehicle expenses for the financial year would be eligible for deduction as a business expense.

Remember, this is just an example, and actual logbook entries and calculations may vary based on your specific circumstances. It is important to maintain accurate and consistent records throughout the 12-week period and consult with a qualified tax professional for personalised advice regarding logbook entries and deductions.

It is important to note that the logbook method requires meticulous record-keeping and accurate calculations. If you have any uncertainties or specific questions regarding keeping a motor vehicle logbook for tax purposes, it is advisable to consult with our office or refer to the ATO website guidelines for detailed information.

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