If you are carrying out a business operation or your work requires plenty of travel or you receive travel allowance, then you must keep in mind to keep records of your travel kilometres using a log book. If you are unaware of this method and how you could claim motor vehicle expenses for work then you could potentially be losing out on money that should be back in your own pocket. A log book could turn out in your favour by allowing you to claim expenses that you would otherwise not be eligible to claim.
This method enables you to filter the proportion of business related car expenses from the total car use that can be claimed on your tax return.
While a lot of people tend to get confused on how to classify what work is related, keeping appropriate log book records would simplify the task.
The Logbook must contain the following details:
- Date for each journey
- Start and finish for each journey
- Start and finish odometer reading for each journey
- Total number of kilometres for each journey
- Reasons for each journey
- Start and finish date for the logbook period
- Start and finish odometer reading for the logbook period
- Total number of kilometres travelled during the period
- Business use percentage for the period
So, what are “vehicle expenses” in the eyes of the ATO?
Vehicle expenses include:
- Fuel and oil.
- Repairs and maintenance
- Car loan interest
- Car lease payments
- Car registration
- Insurance
- Depreciation
- Any other expenses that would be related to you maintaining your car for work related purposes.
Vehicle expenses do not include:
- the purchase cost of the car
- parking tickets, speeding and other fines
- Beautification of vehicle
The ATO requires you to keep records of a continuous 12 week period for the financial year to be able to claim the vehicle expenses. It is important to keep in mind that since we are close to the end of financial year, one should begin to keep appropriate records before we start to submit the tax returns.
If you are still unsure about the logbook method or have any enquiries, please feel free to contact our team.