Oh no, the dreaded log book, why do we need to revisit this? Hmmmm, because it is often misunderstood and could potentially cost you thousands in tax deductions. We here at EASE are all about helping you minimise your tax, within legal parameters.
So, let’s cut to the chase! Short and sweet, without a log book you cannot claim the actual expenses incurred during the course of your business. Sorry, even if you have receipts totalling $10K, these are useless if you do not have a legal book to support your position. The best you could claim in these circumstances is cents per kilometer and you still need some form of documentation to show how you came up with your total km’s travelled. If you are doing substantial work/business related travel then you could be missing out on maximising our deductions.
To help you complete a log book there are many apps available for use on your smartphone, everyone seems to have one these days so there is no excuse. Driversnote is a very popular choice. A quick search on the Apple Store or Google play will also have other suggestions. You only need to keep one for 12 consecutive weeks and this is good for a 5 year period. Even if you sell your vehicle and buy a new one, providing the business use is fundamentally the same you can keep using the same log book. If you wish to claim the running costs of two vehicles then you will require a logbook for both vehicles.
Some scenarios where it gets even more complicated to consider:
No. 1 You are a director of a company however your car is in your personal name and you use your car for business. A business can directly reimburse you for each expense incurred for work-related activities but it must be on an item-by-item basis AND the you would have to incur the cost first. You are not able to directly claim vehicle expenses from your company. The best you could do is have a log book in your personal name and claim this costs as a work related vehicle. In order to cover these costs your company may be able to pay you an allowance ensuring you are not personally out of pocket.
No 2 You are a tradie with a ute, less than 1 tonne capacity. In the past many of these vehicles didn’t require a log book, however in 2018 FY the rules have changed and now you do There are also rules in place which may exempt or expose this type of vehicle to fringe benefits tax. Visit the ATO website or contact us to discuss what those exempt vehicles are.
No 3 – You have a company owned vehicle. If you do not have a log book you will then need to pay fringe benefits tax based on the statutory method of calculation. This may result in a high value of fringe benefit tax.
No 4 – You are an employee and wish to claim your car for work related purposes and if queried by the ATO, your employer may be required to provide a statement stating that you travel for work-related purposes.
So the purpose of this blog is to highlight the benefits of having a logbook and also remind you to check the status of your current one, if applicable. As the saying goes, time flies when you’re having fun and before you know, your logbook has expired and you don’t have a replacement, oh please don’t’ do that.
Disclaimer: The contents of this article are in the nature of general comments only, and are not to be used, relied or acted upon with seeking further professional advice. EASE Business Services accepts no liability for errors or omissions, or for any loss or damage suffered as a result of any person acting without such advice. Liability limited by a scheme approved under Professional Standards Legislation.