Editor: Keeping a car logbook may be required to accurately calculate the business-use percentage of vehicle expenses (e.g., fuel, registration, insurance and depreciation) for tax deductions.
Taxpayers can keep the same logbook for their car for five years, but there are circumstances where they may need a new one during that period.
Relying on a logbook that no longer represents a client’s work-related travel may result in them claiming more, or less, than they are entitled to.
A new logbook may be required when a taxpayer:
- moves to a new house or workplace — updating their residential or work address may then be necessary;
- has changes to their pattern of use of the car for work purposes — checking that they are still doing the same role and routine may then be necessary.
Taxpayers using the logbook method for two or more cars need to keep a logbook for each car and make sure they cover the same period.
Clients who purchase a new car during the income year and want to continue relying on their previous car’s logbook must make a nomination in writing. The nomination must be made before they lodge their tax return and state:
- they are replacing their original car with a new car; and
- the date that nomination takes effect.
Taxpayers should remember that, if their employer provides them with a car or they salary sacrifice a car using a novated lease, they are not entitled to claim work-related car expenses using the logbook or cents per kilometre method, as they do not own the car.
When claiming car expenses using the logbook method, taxpayers also need to keep various types of other records, including (among other things) odometer records for the start and end of the period they own the car, proof of purchase price, decline in value calculations, and fuel and oil receipts (or records of a reasonable estimate of these expenses based on odometer readings).
Editor: Please contact our office if you require assistance regarding the above, including in relation to claiming car expenses using the logbook method or determining if a new logbook is required.
