3/374 Pennant Hills Road, Pennant Hills NSW 2120
Call Us Today:
(02) 9980 5892

Claiming A Car’s Expenses With The Vehicle Logbook Method

As a business owner, you can claim a tax deduction for expenses for motor vehicles – cars and certain other vehicles – used in running your business.

When it comes to claiming on motor vehicle expenses, sole traders and those operating in partnerships are able to claim for the cars used for their business with the logbook method.

It’s a fairly simple method for claiming the tax deductions on the expenses that can be incurred with vehicles. However, it does require rigorous record-keeping of those expenses. The expenses that you can claim on your vehicle used for business purposes can include:

  • fuel and oil
  • repairs and servicing
  • interest on a motor vehicle loan
  • lease payments
  • insurance cover premiums
  • registration
  • depreciation (decline in value).

Working Out The Amount You Can Claim With The Logbook Method

A registered tax agent can assist you with the process of making a claim on your vehicle, but they need to be sure that you are accurately recording the expenses. To work out the amount that you can claim with the logbook method, you need to:

  1. Keep a logbook
  2. Work out your business-use percentage (divide the distance travelled for business by the total distance travelled, then multiply by 100)
  3. Add up your total car expenses for the income year
  4. Multiply your total car expenses by your business-use percentage

You need to be able to provide the Australian Tax Office with evidence of your expenses that have been claimed. You will need to keep records of:

  • An electronic or pre-printed logbook
  • Evidence of your actual fuel and oil costs, or odometer readings on which you estimate your fuel and oil use
  • Evidence of all other car expenses

Your Logbook

The logbook is perhaps the most important and critical component of this claims method. It needs to contain:

  • when the logbook period begins and ends
  • the car’s odometer readings at the start and end of the logbook period
  • the total number of kilometres the car travelled during the logbook period
  • the number of kilometres travelled for each journey. If you make two or more journeys in a row on the same day, you can record them as a single journey
  • the odometer readings at the start and end of each subsequent income year your logbook is valid for
  • the business-use percentage for the logbook period
  • the make, model, engine capacity and registration number of the car.

Was this year going to be the first year that you kept a logbook to use for this method? It needs to be kept for at least 12 continuous weeks during the income year, and be indicative and representative of your travel throughout the year.

If you are planning to use the logbook method to claim expenses for two or more vehicles, the logbook for each one must cover the same timeframe. The 12-week period that you choose should be representative of the business use of all vehicles.  This is to ensure that you don’t change your pattern of driving to suit the log books.

As always, you need to keep in mind that business and personal use needs to be correctly identified and distinct in the percentage that you are claiming for work purposes. Travelling between your home and your place of business is considered to be for private use unless you are a home-based business and your trip was for business purposes.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.


What our Client Say

John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier

David and Alison Parker

I have been consulting J L Noller and Co. (more specifically Jane) for six years and during this time I have found her to be professional, efficient and easy to discuss all accounting and taxation matters with. Her office team are all polite and friendly also.

David and Alison Parker

Business Owner

Carl Gillmore

I have used Jane & the team for the last 6 years for all of my business & personal accounting needs. They have always been professional, easy to talk to & available when we have needed assistance.

Carl Gillmore

Carl Gillmore Landscape

John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier