If you use your personal car for work-related purposes, it is likely that you can claim your car expenses on your individual income tax return. It is important to note that to and from work is not considered as work-related travel.

There are two methods to calculate car expense claims on your tax return:

• Cents per km method, or
• Car Logbook method.

This article will discuss the ATO’s requirement for the logbook method.

The car logbook method is a good way to track your car expenses. In many cases, it can give you a higher deductions compared to the cents per km method.

When using the logbook method, you must record every trip in your vehicle (both private and business) for a 12-week period. Your logbook is then used to calculate the “business use percentage” of your car across the year. Your business use percentage is the percentage of kilometres you travel in your car for work-related purposes. It’s also the percentage of all of your car expenses you paid during the year that you can claim on your return.

It's crucial to keep accurate records to support your tax deductions in case of an audit. You must record every trip (business and personal) you make in your car for 12 weeks – not just work trips.

If you don’t do this, the ATO will consider your logbook as invalid and may reject all of your car expense claims.

The key logbook requirements are:

• A separate logbook must be kept for each vehicle for a continuous 12-week period and must document.
• When the logbook period begins and ends.
• 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 (business & personal).
• The odometer readings at the start and end of each subsequent income year your logbook is valid for.
• The business-use percentage for the logbook period based on the business use of the vehicle.
• The make, model, engine capacity and registration number of the car.

These entries must be made as soon as possible after the trip. Simply stating ‘business trip’ may not suffice as the ATO require more detailed information in relation to the journey to establish whether the purpose of the trip was for business or private purposes. It is best practice to include further details (e.g. name of client, supplier etc.). Keep in mind that each motor vehicle logbook you have is valid for five years, but you can start a new one at any time.

If the 12-week period is not representative of the whole year, you may have to adjust your business percentage (i.e. upward or downward). If your pattern has changed substantially during the year, the logbook may no longer be valid, and you may need to keep a new logbook.

You may use certain mobile apps to assist you provided they satisfy all the requirements in being able to calculate business usage on trips over a 12-week period (as outlined above).

Alternatively, you can also request us to send you a copy of our MS Excel logbook.