Maximise Car Expenses with Logbook

Using a Logbook to Maximise Car Expenses

When it comes to claiming car expenses on your tax return, using a logbook can be a game-changer. Not only does it ensure you're compliant with ATO guidelines, but it also helps you maximise your deductions, potentially saving you a significant amount of money. Here’s a simple and instructional guide to get you started.

Understanding the Logbook Method

The logbook method allows you to claim a percentage of your car expenses based on the proportion of work-related use. To use this method, you need to keep a valid logbook for a minimum of 12 continuous weeks. This logbook will help establish the percentage of time your car is used for business purposes ti determine your tax deductions.

Steps to Maintain a Logbook:

1. Record Every Trip: Note down each journey, including the date, odometer readings at the start and end, the purpose of the trip, and the total kilometres travelled.
2. Calculate the Work-Related Percentage: At the end of the 12-week period, calculate the percentage of work-related travel. This percentage will be used to determine the deductible portion of your car tax  expenses.
3. Keep Receipts: Maintain receipts for all car expenses, including fuel, servicing, insurance, registration, and repairs.

Types of Car Expenses You Can Claim

When using the logbook method, you can claim a variety of car-related expenses proportional to your work-related use. These include:

• Fuel and Oil: Costs for running your vehicle.
• Repairs and Maintenance: Expenses for servicing and repairs.
• Insurance: Premiums for your car insurance.
• Registration: Costs for registering your vehicle.
• Depreciation: The decline in value of your car over time.
• Interest on Loan: Interest paid on a car loan.

Car Financing: Leases vs. Other Financing

Car financing can impact your deductions, and it’s essential to understand the differences:

• Leases: If you lease your car, the entire lease payment is generally tax deductible. This can be a straightforward way to claim car expenses.
• Other Financing: For other forms of car financing, such as loans, you can claim depreciation and interest deductions. The depreciation is calculated based on the car's effective life, while the interest is tax deductible as it is incurred.

Impact of Luxury Car Limits

Special rules apply to luxury cars, which are defined as cars designed mainly for carrying passengers and costing more than the luxury car limit. For the 2024 income year, this limit is $68,108. If your car exceeds this limit, your depreciation claim is capped at this amount, regardless of the actual cost of the car.

Example to Illustrate

Let’s say you drive 10,000 kilometres in a year, and your logbook shows that 6,000 kilometres were for work-related purposes. This means 60% of your total car expenses can be claimed as a tax deduction. If your total car expenses for the year amount to $5,000, you can claim $3,000 (60% of $5,000) as a work-related tax deduction.

Common Traps to Avoid

• Incomplete Logbooks: Ensure your logbook is complete and accurate. Missing details can lead to your claim being disallowed.
• Private Travel: Only claim the work-related portion. Over-claiming can attract penalties.
• Not Updating Logbooks: If your work patterns change, you need to update your logbook to reflect the new usage.

Gotax Deduction Grabber App

To simplify the process, consider using the Gotax Deduction Grabber App. This app includes all the logbook and tax expense recording systems you need. Simply scan the QR code to download and start tracking your expenses effortlessly.

Gotax Piece of Tax Advice

Always keep your logbook up to date and ensure it accurately reflects your work-related travel. A well-maintained logbook not only maximises your deductions but also provides peace of mind in case of an audit. Remember, the ATO scrutinises car expense claims closely, so accuracy is paramount.

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