Motor vehicle logbooks: how, when and why to keep one

The 12-week representative period

A logbook period must generally run continuously for at least 12 weeks and reflect the vehicle’s normal pattern of use. Choose a period that includes ordinary work rather than a one-off project, holiday or unusual shutdown. If the business is seasonal, the selected period should still produce a fair representation of annual use.

A valid logbook can generally be used for up to five income years if the pattern of use does not materially change. A new logbook may be needed sooner when the driver’s role, workplace, client geography, vehicle availability or private use changes. Review representativeness each year rather than automatically reusing an old percentage.

What every journey entry needs

For every journey during the logbook period, record the date, purpose, starting odometer, ending odometer and kilometres travelled. Descriptions such as “business” are weak. A useful purpose identifies the client visit, supply trip, meeting, job site or other income-producing activity.

Record the logbook period’s opening and closing odometer readings and retain the vehicle’s odometer reading at the start and end of the income year. Keep fuel, registration, insurance, servicing, finance and other expense evidence relevant to the method being used. The logbook percentage does not remove the need to establish actual costs.

Business travel versus private travel

Home-to-regular-work travel is usually private, even if small tasks are performed on the way or work equipment is carried. Limited exceptions can apply, including some itinerant work patterns or transport of bulky equipment where strict conditions are met. The facts matter, and convenience alone does not convert commuting into business travel.

Trips between workplaces, to visit clients, collect supplies or attend temporary work locations may be business travel when sufficiently connected with earning income. Write the purpose at the time. Reconstructing destinations months later from bank transactions or calendar entries is less reliable.

Individuals and sole traders

Individuals and sole traders need to identify the deduction method available for the vehicle and income year. Under a logbook-based claim, the business-use percentage is applied to eligible vehicle expenses, subject to ownership, substantiation and tax rules. Private use remains excluded.

Cars and other vehicles can be treated differently. A vehicle that is not a “car” for income-tax purposes may have different substantiation rules. Before beginning a logbook, confirm the vehicle category, who owns or leases it, and whether another entity reimburses or provides the vehicle.

FBT operating-cost logbooks

Employers using the FBT operating cost method work within the fringe benefits tax rules. The logbook and odometer records help establish the business-use percentage, but the calculation, employee contributions and taxable value belong to the employer’s FBT position rather than the employee’s personal deduction.

Company directors should not copy a sole-trader claim into a company return. Document who provides the car, who pays each cost, whether private use is available and whether reimbursements occur. Income-tax, GST and FBT outcomes need to be coordinated.

A practical review sequence

Begin with source documents rather than a desired answer. Put the relevant agreements, statements, invoices, bank transactions and operational reports in date order. Reconcile totals before analysing tax treatment. This separates a missing-record problem from a technical tax question and makes timing differences easier to explain.

Next, write down the actual facts in plain language: who performed the work, who paid, what was supplied, when an amount was earned or spent, and whether any private purpose was involved. Compare those facts with the official guidance linked below. Where an assumption is uncertain, label it and obtain the missing evidence instead of allowing it to become an undocumented conclusion.

Finally, record the treatment adopted, the reason, any calculation and who reviewed it. Add the issue to the regular bookkeeping or year-end checklist if it can recur. Consistent monthly controls usually provide stronger evidence and better decisions than a large reconstruction after the end of the year.

Keep the scope of advice clear

Accounting records often sit beside contracts, employment arrangements, lending decisions, licences and personal financial choices. A tax outcome does not by itself establish that an arrangement is legally effective, commercially suitable or compliant with another regulatory regime. Raise connected issues early so the right adviser can be involved.

For records matters, Demeter can help organise the tax facts, reconcile the records, identify the applicable reporting questions and explain the information needed for advice. Legal rights and contract interpretation belong with a lawyer. Credit assistance and financial product recommendations require appropriately licensed advice. The aim is a coordinated decision, not one professional answer stretched beyond its proper scope.