How should a sole-trader tradie keep a vehicle logbook?

Who the method is for

The ATO logbook method is for sole traders or partnerships claiming expenses for a car. Check the ATO's vehicle definition and the method available for your business structure before starting; different rules can apply to other vehicles and entities.

Sources[1]

How the claim is worked out

The ATO says to keep a logbook, divide business kilometres by total kilometres and multiply by 100, add up your total car expenses for the year, then multiply by the business-use percentage.

Fictional example: 9,000 business kilometres out of 12,000 total kilometres gives 75% business use. If eligible car expenses for the year total $8,000, applying that percentage gives $6,000. Keep the expense evidence as well as the logbook.

Sources[1]

What the logbook must contain

From the ATO's list. The ATO says consecutive journeys on the same day can be recorded as one journey.

CAR LOGBOOK
Vehicle: [make, model, engine capacity, registration]
Logbook period: [start date] to [end date]
Odometer at start: [km]   Odometer at end: [km]

Journey date/start and end: [dates]
Reason for journey: [specific business purpose or private]
Start odometer: [km]   End odometer: [km]   Distance: [km]

Total period kilometres: [km]
Business kilometres: [km]
Business-use percentage: business km / total km x100 = [%]
Later income-year opening and closing odometer: [date, km]
Expense evidence location: [reference]

Sources[1]

Timeframe and validity

In your first year of using the method the ATO says to keep a logbook for at least 12 continuous weeks that represent your travel across the year. If you started using the car for business less than 12 weeks before the end of the income year, you can continue into the next year to cover 12 weeks.

Each logbook is valid for five years and you can start a new one at any time. If you rely on a logbook from an earlier year, keep it and keep recording odometer readings. The ATO says a change in circumstances, such as a change in the type of work, may mean you need a new logbook. If you use two or more cars, each logbook must cover the same period.

Sources[1]

Expense evidence

The ATO says to keep evidence of fuel and oil costs, or odometer readings from which you estimate them, and evidence of all other car expenses. Sole traders with simple tax affairs can create a logbook and record trips in the ATO app's myDeductions tool. This guide does not cover the car definition, per-kilometre rates or whether trips such as commuting are deductible, so confirm those with the ATO or your accountant.

Sources[1]

Common questions

How do I keep a car log book for tax purposes?

Record the logbook period, odometer readings, and for each journey the date, reason, odometer readings and kilometres, for at least 12 continuous weeks that represent your year. Then work out the business-use percentage and keep fuel and other expense evidence. This applies to sole traders and some partnerships claiming for a car.[1]

How long is a log book valid for ATO?

The ATO says each logbook is valid for five years, but you may start a new one at any time, and a change in circumstances such as the type of work may mean you need a new one. You must keep the logbook and odometer readings in later years.[1]