Many taxpayers miss out on maximising their claims due to inadequate record keeping. Once such instance is failing to maintain a valid log book. The car log book is an important piece of tax substantiation for those who use their vehicle in the course of performing their duties.
From July 1, 2015, the following rules apply for work related car expenses:
With the above changes, greater emphasis will be placed on individuals who travel more than 5,000 business kilometres to maintain a valid log book, if they opt for the log book method.
The log book method will therefore benefit an individual if their estimated deduction exceeds $3,300 for the 2015-16 income year (that is, 66 cents x 5,000 Km’s under the cents per kilometre method).
The purpose of the log book and accompanying odometer records is to determine the business use percentage of the vehicle. As a general rule, the higher the business-use percentage, the greater the deductions that may be claimed for work-related car expenses
The requirements for maintaining a log book (income tax) include:
Each log book kept must contain:
In the Tax Office’s view, when recording the purpose of the journey, an entry stating “business” or “miscellaneous business” will not be enough. The entry should sufficiently describe the purpose of the journey so that it can be classified as a business journey. Private travel is not required to be shown, but it may help to include in the records to help with calculations.
The Tax Office has a smartphone App (Search “ATO”) containing a ‘myDeductions’ tool may solve the record keeping dilemma This feature enables individuals to capture receipts for work-related car expenses as well as enter information for a log book. The App also has online calculators, tax rates, news and updates, payment plan estimators and more.
For further information regarding log books, please contact one of our friendly staff members for an obligation free consultation on (03) 9792 2772.
Established in 1999, Infinity Group is a multi-service firm that specialise in the areas of Finance, Property, Accounting & Taxation, Insurance and Migration Services.