Edited version of private advice

Authorisation Number: 1052362784223

Date of advice: 25 February 2025

Ruling

This is an edited version of a revised private ruling. It replaces the edited version of the private ruling with the authorisation number 1052315512951.

Subject: Motor vehicle expenses

Question 1

Are you entitled to claim a deduction for car expenses using the logbook method for the 20XX-XX financial year based on a logbook kept in the 20XX-XX financial year?

Answer 1

No.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are employed as a tradesmen.

You are required to attend various job sites to perform your work, along with your large work tools.

You use your own private car for work related purposes.

The car is registered in your name.

On DD MM 20XX, you commenced recording journeys in your logbook.

Your employment duties have been consistent throughout the 20XX-XX financial year and continue to be unchanged at this time.

You estimate your car expenses for the 20XX-XX financial year will be $X with a logbook percentage ranging from 40% to 80%.

Relevant legislative provisions

Income Tax Assessment Act 1997 Division 28

Income Tax Assessment Act 1997 section 28-110

Income Tax Assessment Act 1997 section 28-115

Income Tax Assessment Act 1997 section 28-120

Income Tax Assessment Act 1997 section 28-125

Income Tax Assessment Act 1997 Subdivision 28C

Income Tax Assessment Act 1997 Subdivision 28-F

Income Tax Assessment Act 1997 Subdivision 28-G

Income Tax Assessment Act 1997 Subdivision 28-H

Income Tax Assessment Act 1997 Subdivision 900-C

Reasons for decision

To claim a deduction for car expenses, you must use one of the statutory methods outlined in Division 28 of the Income Tax Assessment Act 1997 (ITAA 1997).

Under section 28-15 of the ITAA 1997 you can choose either of the following methods for calculating your deduction for your car expenses:

•                     'cents per kilometre' method (Subdivision 28-C of the ITAA 1997)

•                     'logbook' method (Subdivision 28-F of the ITAA 1997).

To use the logbook method, you must substantiate your car expenses under Subdivision 900-C of the ITAA 1997 and you must also keep a logbook. Subdivision 28-G of the ITAA 1997 sets out how to keep a logbook.

A logbook must be kept in the first year for which this method is used as per subsection 28-115(1) of the ITAA 1997. As you did not keep a logbook during the 20XX-XX financial year you cannot use the logbook method to calculate your car expenses for that financial year.

The logbook method, however, may be used for the 20XX-XX income year provided the following requirements of Subdivision 28-G of the ITAA 1997 are all met:

1.             you keep your logbook for a continuous period of 12 weeks

2.             you record the journeys made in the car in the course of producing your assessable income (business journeys) in your logbook as soon as possible after making the journey with each entry showing:

                            a.                the start and end date for the journey

                            b.                the car's odometer reading at the start and end of the journey

                            c.                how many kilometres the car travelled on the journey

                            d.                why the journey was made

3.             you record in your logbook:

                            a.                the date the logbook period begins and ends

                            b.                the car's odometer reading at the start and end of the logbook period

                            c.                the total number of kilometres travelled during the logbook period

                            d.                the total number of kilometres the car travelled on business journeys during the logbook period

                            e.                the business use percentage - this is calculated by dividing the number of kilometres travelled for business journeys (d) by the total kilometres travelled during the logbook period (e).

Generally, your logbook is valid for 5 years.

You must also keep odometer records for each year you are relying on your logbook (Subdivision 28-H of the ITAA 1997).

To calculate your deduction using the logbook method, you multiply each car expense by the business use percentage. You calculate the number of business kilometres (and therefore the business use percentage) by making a reasonable estimate which takes into account relevant matters including:

•                     your logbook, odometer records or other records you have

•                     any variations in the pattern of your use of the car

•                     any changes in the number of cars you used in the course of producing your assessable income.

If your pattern of use is the same or very similar to the period you kept your logbook, you can use the business use percentage recorded in your logbook.

Conclusion

As you commenced keeping your logbook on DD MM 20XX, you cannot use the logbook method to calculate your car expenses for the 20XX-XX financial year. However, you can still claim your car expenses using the cents per kilometre method under Subdivision 28-C of the ITAA 1997, which requires a reasonable estimate of the business kilometres driven. A claim using the cents per kilometre method is limited to 5,000 business kilometres.

You can use the logbook method for the 20XX-XX financial year provided your logbook meets the requirements set out in Subdivision 28-G of the ITAA 1997.

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