Navigating the Maze: Keeping a Valid Logbook with the ATO
Tax time in Australia can be a headache, especially when claiming car expenses. The good news is that the ATO offers the logbook method, allowing you to deduct a portion of your car expenses based on actual business use. But before you dive in, keeping a valid logbook is crucial.
The Essentials:
Timeframe: Your logbook must cover at least 12 consecutive weeks and be representative of your entire year's travel.
Content: Each entry should include:
Date: Date of the journey.
Start & End Odometer Readings: Record the odometer reading at the beginning and end of each trip.
Distance: Calculate the total kilometres travelled for each journey.
Purpose: Clearly state if the trip was for business or personal use.
Destination: Indicate the location you travelled to (optional but helpful).
Validity: Each logbook is valid for 5 years, but consider updating it if your work habits change significantly.
Storage: Keep your logbook and receipts for at least 5 years after lodging your tax return.
Methods for Maintaining Your Logbook:
Logbook Diaries: These physical notebooks offer a traditional approach. Choose one specifically designed for tax purposes, as it helps ensure you capture all the necessary information.
ATO App: This free app, "MyTax Logbook," simplifies the process. Enter trip details on the go, and it automatically calculates distances and business-use percentages.
Spreadsheets: For tech-savvy individuals, create a digital spreadsheet replicating the information required in a logbook. Remember to back it up regularly!
Third-Party Apps: Several paid apps offer advanced features like GPS tracking and automatic expense calculations. Research and choose one that meets your needs and budget.
Pro Tip: Take a clear photo of your odometer reading at the beginning and end of each logbook period. This serves as additional proof and keeps your physical logbook free of clutter.