A log books is a written record of your business use of a vehicle over a period of a least 12 continuous weeks or if you hold the car for less than 12 weeks the period must be the entire period for which you held the car. This log book period should be indicative of the whole year, not just your best 12 weeks of travel.
The log books is one method used to establish a proper basis for calculating a reasonable estimate of business use of a vehicle for the purpose of substantiating a tax deduction under the Income Tax Assessment Act.
It is in your interests to record in the log book any trip/journey made in the car during the log book period in the course of producing your assessable income.
(a) When the log book period begins and ends;
(b) The car's odometer reading at the start and end of the period;
(c) Total number of kilometres the car travelled during the period;
(d) The number of kilometres the car travelled in the course of producing your assessable income, on journeys recorded in the log book;
(e) The number of kilometres referred to in (d) expressed as a
percentage of total number referred to in (c);
If two or more journeys in a row are made in the car on the same day in the course of producing your assessable income, they can be recorded as a single consecutive journey.
Odometer records document the total number of kilometres the car travelled during a particular period. They also record the car's engine capacity and other details. The following must also be entered in the document:
(a) the car's make, model and registration number (if any)
(b) if the car has an internal combustion engine - its engine capacity expressed in cubic centimetres; and
(c) if a nomination, replacing one car with another, affects the car -the corresponding details for the other car affected by the nomination.
You must retain your odometer records relating to the period when you held the car in the income year. If you keep a log book for the income year, you must retain the odometer records for the same period as the log book.
If you don't keep a log book for the income year, you must retain the
odometer records for the same period as evidence of a car expense for the car for the income year.
LOG BOOK PERIOD
It will be possible to keep a log book that overlaps two tax years. If an employee has two or more cars, the log books must cover the same period for each car.
CAR RECORDS
The following matters will not need to be recorded in the log book but
must be recorded in writing:
The employer's estimate of business kilometres and the business use
percentage.
What ATO may check
Statistics on recent log book audits indicate that about 70% of log
books inspected consistently have technical errors.
The Australian Tax Office uses forensic scientific tests to confirm
the veracity of log books. Some taxpayers have claimed their log book
was written in a year even before the log book was printed. Forensic tests have also identified that many entries were made on the one day using different coloured pens, rather than, as the Act prescribes, being made at or as soon as possible after the start or end of the period, or the end of the specified day, as appropriate.
Driver fails to enter both opening and closing kilometres.
Entries illegible.
Details of car's make, model, registration number or engine capacity not included.
Twelve weeks (or travel period if less than 12 weeks) chosen not indicative of business/private percentage, in that seasonal variations not taken into account.
Purpose of journey is omitted.
Log books unable to be located.
Business usage claimed when private trips undertaken.
Substantiation car options 12% of cost price or cents per kilometre claim
Completing a log book provides you with a sound basis for claiming the
highest deduction for car expenses and helps insure against an adverse audit. It allows you to choose the car expense method which provides the highest tax deduction.
By choosing to prepare a new log book earlier, you may be entitled to claim higher car expenses.
There is a significant increase in the number of business or residence and the number of business kilometres travelled has increased.
In each of these situations your business percentage has increased. By identifying that increase, you can claim higher deductions based on your business travel.
The log book method of substantiation normally produces the most favorable tax deductions where business usage is high.
It is calculated by taking a reasonable estimate of business kilometres and using that percentage of the actual running costs (of the vehicle) as your deduction. You must record this information, in writing, before you lodge your return.
The estimate takes into account all relevant matters, including:
(a) any log books, odometer records or other records you have;
(b) any variations in the pattern of use of the car throughout the
income year eg. holidays, sick leave, change in employment duties etc;
(c) any changes in the number of cars you used in the course of
producing your assessable income.
THE LOG BOOK METHOD:
Multiply any vehicle expenses that qualify as deductions by a reasonable estimate of business kilometres - expressed as a
percentage of total kilometres (the business use percentage).
Other methods of substantiation do not require a log book to be kept. These include:
1. Where estimated business usage is up to 5000 kilometres
during the financial year:
The Tax Office's.....x....Reasonable estimate
Standard Rate ..............of business kilmetres
2. Where estimated business usage is more than 5000 kilometres during a financial year:
(a) 12% x purchase price/market value (when leased) of the vehicle (subject to depreciation cost limits);
(b) 33.33% x annual vehicle costs (subject to depreciation cost limits);
(c) Applying the formula in 1. but ignoring business kilometres in excess of 5000 and limiting the claim to 5000 kilometres.
BUSINESS USAGE CALULATION
(A) Odometer Reading at first use
Date............................. Kms..............
(b) Odometer Reading at last use
Date............................. Kms..............
Subtract (A) from (B)
equals Total distance travelled = _______
mulitlied by Business percentage usage........ = _______%
equals ....... Total business distance travelled = _______
REPLACMENT VEHICLE
(A) Odometer Reading at first use
Date ............................ Kms ...............
(B) Odometer Reading at last use
Date ........................... Kms .................
Subtract (A) from (B)
equals Total distance travelled = ......
multiplied by Business percentage usage ......%
equals Total business distance travelled = ......
Where a replacement vehicle is used:
Total business kms travelled for both vehicles .........
BUSINESS USAGE PERCENTAGE
Total Business Kilometres x 100 = _____%
___________________________
Total Kilometres
ODOMETER RECORD
Name of taxpayer........................................
Vehicle Make ...................Model.....................
Reg. No. .......................Eng.cap. (cub.cm.)........
Odometer reading at first use:
Date............................Kms.......................
Odometer reading at last use: Date............................Kms.......................
REPLACEMENT VEHICLE
Vehicle Make.................Model........................
Reg. No......................Eng. cap (cub.cm.)............
Odometer reading at first use:
Date.........................Kms...........................
Odometer reading at last use:
ate.........................Kms...........................
Before you start the trip:
1. Enter the date on which you start your trip.
2. Record the odometer reading.
At the conclusion of your trip:
3. Enter the date on which you end your trip.
4. Record the odometer reading.
5. Calculate the difference between the Start figure and the Finish figure in the Odometer Reading column. Insert this amount (actual kilometres travelled) in the Business 1 column. If you travel by motor vehicle for more than one business, then record the kilometres travelled in the second column for your second business, or the third column for your third business.
6. Enter the reason for making this trip in the purpose of Trip column. Eg delivery, sales call in Richmond area, service call Campbelltown. (Optional: no longer required by the Act)
7. Record the driver's name and the date entry is made. The person entering the information can sign in the last column.
ABBREVIATION TIME SAVER
In order to save time, you may choose to use abbreviated symbols to represent commonly used terms in the section labelled Purpose of Trip in your log.
However, it is absolutely essential that alternative diaries or other documentation exits and elaborates on the exact purpose of the trip.
Record here the symbols and their meanings:
A = Appointment/visit...............................
C = Conference/seminar.........................
D = Delivery of goods................................
R = Repair/service call............................
S = Sales call............................................
T = Meet with tax accountant..................
1 Average fuel consumption on...........(type of car) is........ kilometres per litre.
2 Average cost of fuel in 20...is...cents per litre (from Australian Bureau of Statistics (ABS).
3 Total cost of fuel = $...........,br
4 Actual receipts were held from .../.../20..to.../.../20..
I confirm total cost of $..... Annualized estimate of $........