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Car log books | 2023 Gotax

June 10, 2023

When Do You Need a Motor Vehicle Log Book for Your Contracting Business?

Claiming your vehicles as a tax deduction is pretty easy for contractors, as long as you are diligent.  And that diligence involves keeping a log book for applicable vehicles.   

What is a Motor Vehicle Log Book?

The log book is a document that records the details of each trip you make in your car for business purposes. From that you can calculate the percentage of your car use that is for business. It is this percentage that is then applied across all the vehicle expenses to determine how much of a tax deduction you are entitled to.

There are a few misconceptions here, as a car (including four-wheel drives) is defined as a vehicle designed to carry both:

  • a load less than one tonne
  • fewer than nine passengers

You need a motor vehicle log book if your vehicle fits that definition.

Other vehicles, such as motorcycles, trucks, vans, or buses, have different rules.  To claim tax deductions for other vehicles a different explanation for another time suffice to say it's all about the private usage.

How to Keep a Motor Vehicle Log Book?

To keep a motor vehicle log book, you need to follow these steps:

  1. Record the start and end date of your log book period, which must be at least 12 continuous weeks during the income year. The log book period must be representative of your travel throughout the year.
  2. Record the odometer readings at the start and end of the log book period and each subsequent income year that your log book is valid for. A log book is generally valid for five years.
  3. Record the total number of kilometres that the car travelled during the log book period.
  4. Record the number of kilometres travelled for each business journey, as well as the reason, date, and odometer readings at the start and end of each journey. You can record two or more journeys in a row on the same day as a single journey.
  5. Record the make, model, engine capacity, and registration number of the car.
  6. Calculate your business-use percentage by dividing the total number of kilometres travelled for business by the total number of kilometres travelled during the log book period and multiplying by 100.
  7. Keep evidence of your actual fuel and oil costs or odometer readings on which you estimate your fuel and oil use.
  8. Keep evidence of all your other car expenses, such as repairs, servicing, interest, lease payments, insurance, registration, and depreciation.

You can use a pre-printed log book (available from newsagent) or the Deduction Grabber App beautifully crafted by Gotax.  Get started now, just scan the QR code:

Vehicle log book

What Vehicle Expenses Can You Claim?

As a rule of thumb, every time you open your wallet (purse) and spend money on your vehicle, the chances are that it's tax deductible.  

The motor vehicle log book then determines to what extent it is tax deductible.  Here is an outline of most of the common motor vehicle expenses you are likely to incur.  Your tax deductions are based on your business-use percentage as determined by your log book. 

  • Fuel and oil
  • Repairs and servicing
  • Interest on a motor vehicle loan
  • Lease payments
  • Insurance cover premiums
  • Registration
  • Depreciation (decline in value)

To work out how much you can claim as a deduction, you need to add up your total car expenses for the income year and multiply them by your business-use percentage.

For example, if your total vehicle expenses are $10,000 and your business-use percentage is 60%, you can claim $6,000 as a deduction.

There is a limit on the cost you can use to work out the depreciation of passenger vehicles.  The car limit cap can limit the amount of depreciation you can claim.  It changes every year so send a message to Gotax and get the current year rates.

Keeping a motor vehicle log book can help you maximise your tax deduction for your contracting business, follow the log book rules and you'll be fine.


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