Car Logbooks Explained: What SMEs Need to Know

Car expenses are one of the most commonly claimed deductions. They’re also one of the most frequently questioned.

The logbook method can be highly effective, but only if it reflects reality.

A logbook is valid for up to five years, which sounds generous. The issue is that many people set one up and then forget that their circumstances have changed.

Logbooks require regular updating but before you consider submitting, do a quick sense check:

• Has your role changed since you created the logbook?

• Has your commute or work location shifted?

• Are you using the car differently than before?

If so, the original logbook may no longer be valid.

There are also clear situations where you can’t claim at all. If the car is provided by your employer, or you’re using a novated lease, the deduction isn’t available.

Beyond the logbook itself, supporting records matter. Things like odometer readings, purchase details and running costs all form part of the claim.

The most common issue we see is that claims can’t be substantiated rather than they are incorrect.

Digital solutions can support accurate logbook keeping with a variety of apps - free and paid - that can help you keep track in real time.

To be certain you’re on sure footing, it pays to engage experienced small business accountants who can use their experience and latest tax knowledge to ensure you are not only claiming correctly, but doing it in a way that stands up if reviewed.