You have had the conversation with your Accountant, you know you are supposed to have one, you are warned what will happen if you don't. You take on board everything said, agree and then proceed to do absolutely nothing about it. Welcome to the world of Log Books.
You have been warned
If you want to claim a tax deduction for business use of your car this year, whether you own it through a company you run, as a sole trader or even if your just an employee for somebody else. You must have a log book to show the business use if you wish to use the Log Book Method. Please note, below is for the Log Book Method. You are entitled to use the cents per kilometre method but usually it works out worse and you still need to have a diary or proof of some kind of your travel.
How to keep a log book
- Find a way to record your travel such as here. There are also apps that are accepted and some are even GPS based.
- Record the odometer reading at the start and end of each time you get in the car. Two or more journeys in a row may be recorded as one (Perfect for Salesman)
- Record the type of travel. Business or private.
- Continue this for 12 weeks
Once the 12 weeks is finished, the log book will be valid for 5 years. However you will need to also note the odometer reading for the start and end of the income year in which you started it, this proves that the 12 weeks in question is actually indicative of the usual travel you complete for the whole year.
What is considered business travel?
- From home to alternative workplace and back or directly home (not usual office)
- From office to alternative workplace and back
- General errands leaving the office
- Delivery or collection of supplies, equipment or bulky tools
- Attend conferences or meetings, including training
Please note, unless it meets one of the above, to and from work are NOT considered business travel.
How to use your log book for a deduction
From here, we simply take the business travel logged as a percentage of total travel and apply this to all expenses related to your car. This includes depreciation so it is especially important for those who have just bought a brand new $60,000 car.
And thats it! It really isn't as hard as it first sounds. It will ensure we are claiming the most we are allowed. For most clients, this will actually be more than we might otherwise claim. So go out and get log booking.