What is a vehicle logbook?
For tax purposes, the vehicle logbook is way of keeping a record of the car’s usage, to separate the costs of business and personal use.
For first time logbook users, you must keep a log book during the financial year for at least 12 continuous weeks. That 12 week period should be a good representation of your travel throughout the year, so best to avoid the period where you typically take holidays or have a slowdown in business, such as the Xmas/summer holidays.
Each time you get in your car, note the odometer reading, record km’s travelled and give a reason for the trip. If you visit a client site, attend a networking meeting or collect supplies for your business, be sure to record them as business trips.
From the sample 12 week period you should be able to easily determine the percentage split between business and personal. For example, if you spent $2,000 in the designated period and business travel consisted of 60%, the amount claimable under business use would be $1,200.
Remember that you must keep these records for 5 years and also all evidence of expenditure, in the form of receipts and invoices.
So, what’s the best way to record and capture all this information?
There are many options available for maintaining a vehicle logbook – there is the traditional method of paper and pen. There are logbooks already printed, available from most stationery stores, you could even download and print a readymade template from the ATO website.
If technology is more your thing, there are many free apps available to use with your smart phone. These apps will generally keep track of km’s travelled using your smartphone’s GPS function and will remember your odometer readings. All you have to do is simply nominate a personal or business category. Most will also generate reports and email them to you, so there are no headaches for you when your accountant demands information and backup. How good would it be to be able to provide your accountant with an automated report for FBT purposes and income tax time? And, best of all, it comes from a source backed by the ATO rulings.
There are many ATO compliant apps out there. Here are just a few examples:
Logit is an easy to use app, free of charge, and an ideal logbook method for small businesses who don’t have time to mess around with manual records.
If you are the forgetful type and want something more sophisticated that automatically logs your trips, LogbookMe may be for you. This app can be used to manage multiple vehicles, for those businesses with more than one vehicle on the road. It has extended features such as live tracking of all your vehicles.
If we were your bookkeepers, you’d already know about recording your work journeys in a vehicle log book so if you’re thinking about changing bookkeepers, or perhaps you’re doing it yourself, contact us to discuss how we can help save you time and grow your business.