I Want to Claim a Tax Deduction for my Car. What records do I need to Keep?

Key log book requirements for car expense claims in your tax return   

You may be considering claiming car expense deductions under the log book method against your employment or sole trader business income.  

The Australian Taxation Office (‘ATO’) has been increasing its audit activities in relation to these claims.  In particular, the ATO has been paying closer attention to making sure that individual taxpayers making these claims comply with the strict log book requirements for these claims.  

It is important that you are aware of (and you have checked that you satisfy) the following requirements before considering a car expense claim for any income year: 

Having a valid log book – A car expense claim for the 2023 income year must be supported by a valid log book that was kept for a minimum continuous period of 12 weeks in any of the 2019 to 2022 income years (inclusive) in relation to your car.    

In addition to this, for a log book to be accepted as a valid log book, it needs to record the following information: 

1. The date the log book period (e.g., the 12-week period) begins and ends.  
   

1. Odometer readings at the start and end of the log book period.  
   

1. The total kilometres your car travelled during the log book period, including the total number of kilometres travelled for income-earning purposes. 
   

1. Your car’s business (or work related) use percentage for the log book period.  
   

1. The following details of each business (or work related) journey travelled during the log book period (note that these must be recorded at the end of the journey or as soon as possible afterwards): 
   

• The day the journey began and the day it ended. 
  
• Your car’s odometer readings at the start and end of the journey. 
  
• How many kilometres the car travelled on the journey.  
  
• An appropriate description of the purpose of each journey (note descriptions such as  “Client visit”, “Customer visit” and “Business trip” will not be accepted by the ATO). 
  

Making a reasonable estimate of a car’s business kilometres – Your claim for the income year must be based on a reasonable estimate of your car’s business kilometres.  This must take into account a valid log book (noted above) and any changes in the way your car was used for both work/business and private purposes during the year.  

Having odometer records – You must also keep odometer records for the period during the relevant income year that you held your car.  These records must include your car’s odometer readings at the start and end of the period and your car’s make, model and registration number.   

If you have any questions about the above and/or wish to discuss these claims further, you can contact our office on (07) 3207 1030 and speak to the “tax team”.