Article Summary: 

Claiming vehicle expenses is a common and valuable deduction for many Australian business owners. But to access the full benefit and remain ATO compliant, you need to understand exactly what is required in a valid motor vehicle logbook. This article explains the ATO’s latest rules for 2025, outlines what details must be recorded, the best electronic apps for tracking trips, and the common audit triggers businesses should avoid. Whether you’re a sole trader or running a company, this guide will help you stay on the right side of the ATO while maximising your car-related deductions. 

Why do I need a motor vehicle logbook for tax purposes?

If you use your car for business purposes and want to claim more than the basic rate, the logbook method allows you to claim the business-use percentage of your actual vehicle running costs. This can include fuel, servicing, depreciation, registration, interest, and insurance. 

However, to do this: 

  • You must maintain a valid logbook over a continuous 12-week period which captures your personal and work travel 
  • The logbook must be representative of your normal driving habits 
  • It remains valid for five years unless your driving patterns change significantly 

Failing to keep an up-to-date or detailed logbook can result in rejected claims, reduced deductions, or audit complications. 

What must be recorded in a compliant logbook? 

To meet ATO standards, your logbook must contain the following: 

For each trip, regardless of whether its personal or business during the 12-week period: 

  • Date of journey 
  • Odometer reading at the start and end 
  • Total kilometres travelled 
  • Reason for the journey (for example, “client meeting – Smith Builders”) 

Additional records needed: 

  • Odometer reading at the start and end of the 12-week period 
  • Total kilometres travelled in that period 
  • Vehicle make, model, and registration 
  • Date range of the logbook period 

Tip: Avoid vague trip descriptions like “business” or “work.” Be specific to show a direct link to income-generating activity. 

Important: You must also retain all receipts and records of your car expenses for the year including fuel, servicing, registration, insurance, interest and other running costs. The logbook alone only determines the business-use percentage. 

What is the best electronic logbook app in Australia? 

Digital tools are increasingly preferred by the ATO, provided the data is accurate, complete and exportable. The best logbook apps offer automated tracking, easy classification and compliance-ready reports. 

There are a number of apps available on both the Google Play and Apple App store simply search “Car Log Book’ in your app store to find the best one to suit you requirements.  

What red flags does the ATO look for during vehicle-related audits?  

According to the ATO and industry tax agents, car deductions are one of the most commonly overclaimed work expenses in Australia. In 2023 to 2024, over 3.6 million Australians claimed $10 billion in car expenses, prompting stricter scrutiny. 

Top audit triggers include: 

  • Logbooks with vague or repetitive trip reasons such as just writing “work” 
  • Identical kilometre amounts across multiple entries 
  • No receipts to support fuel, maintenance or insurance claims 
  • Logbooks older than five years 
  • Claiming 100 percent business use which is rarely accepted 

The ATO may cross-check your logbook against: 

  • Odometer readings from service records 
  • Business activity logs such as job sheets, diaries or CRM entries 
  • GPS or vehicle tracking records if available 

Note for Companies and Trusts: The logbook method and cents-per-kilometre method are only for individuals. Companies and trusts must use the actual expenses method. However, logbooks can still assist in determining fringe benefit implications. 

What is the current rate for the cents-per-kilometre method? 

As at 1 July 2024, the ATO updated the cents-per-kilometre rate to: 

88 cents per kilometre for up to 5,000 business kilometres per car per year 

This method: 

  • Covers all running costs including fuel, servicing, depreciation, registration and insurance 
  • Requires reasonable evidence of distance travelled such as diary notes or calendar entries 
  • Does not require a logbook but still needs justifiable estimates 

While it is easier to administer, this method often results in lower deductions than the logbook method, especially if your car has high usage or running costs. 

How often should I update my vehicle logbook? 

  • Once you’ve completed a valid 12-week logbook, it is valid for five years 
  • You must keep annual odometer readings at 1 July and 30 June each year 
  • If your driving pattern changes significantly, you should prepare a new logbook 

Examples of when to restart a logbook include: 

  • Changing job roles or business structure 
  • Shifting from office-based to mobile work 
  • Using a different vehicle for business purposes 

Are there limits to what I can claim under the logbook method? 

Yes. Even under the logbook method, certain ATO thresholds apply: 

  • Depreciation is limited to the car cost cap which is $69,674 for the 2024 to 25 income year 
  • If you purchase a car above this value, you can only claim depreciation on up to the limit 

Make sure your accountant calculates depreciation using the correct capped value if applicable. 

Keep it simple, stay compliant and claim what you’re entitled to  

With so many business owners relying on vehicle deductions, a compliant and well-maintained logbook is essential. Whether you are a sole trader or managing a growing business, digital tools can make compliance easier than ever. At Cosca, our Strategic Accounting team works with clients to ensure every kilometre is accurately tracked, deductions are maximised, and ATO audit risks are minimised. If you’re unsure whether your logbook is still valid or want support setting up a digital system, we are here to help. 

FAQs

Do I need to keep a new logbook every year?

No. A logbook is valid for five years unless your work usage changes. You should record annual odometer readings on 1 July and 30 June.

Can companies use the logbook or cents-per-kilometre method?

No. Companies and trusts must use the actual expenses method. However, logbooks can still be useful to determine private use and FBT obligations.

What happens if my logbook is out of date or incomplete?

You may be restricted to using the cents-per-kilometre method or have your claims reduced during an ATO review.

What if I drive multiple cars for business?

Each vehicle requires its own separate logbook.

Is the ATO my Deductions app good enough?

Yes, for individuals and sole traders. It may not be suitable for larger businesses or fleets where more automation or multi-user access is required. 

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