The Ultimate Guide to Keeping Vehicle Logbooks
If you’re an employer who provides vehicles to your employees for work purposes, you may need to keep track of their usage to comply with Fringe Benefits Tax (FBT) regulations. This can be a daunting task, but it can be manageable with the right knowledge and tools. In this guide, we’ll cover everything you need to know about keeping vehicle logbooks and how to stay compliant with FBT regulations.
Know What Information to Record
When keeping a vehicle logbook, it’s important to record specific information for each trip. This includes;
- the date of the trip,
- the starting and ending locations,
- the purpose of the trip, and
- the distance traveled.
It’s also important to note whether the trip was for business or personal use. Additionally, any expenses related to the vehicle, such as fuel, maintenance, and repairs, should also be recorded in vehicle logbooks. Keeping detailed and accurate records will help ensure compliance with FBT regulations and make tax time less stressful.
Keep Accurate Records of Business and Private Use
One of the most important aspects of keeping a vehicle log book is accurately recording the purpose of each trip. This includes distinguishing between business and personal use. It’s important to keep track of both types of trips, as only business use can be claimed as a tax deduction. Make sure to record the purpose of each trip in detail, including any meetings or appointments attended. Keeping accurate records will help with FBT compliance, managing expenses, and budgeting for future vehicle-related costs.
Keep Track of Fuel and Maintenance Expenses
In addition to recording each trip’s purpose, keeping track of fuel and maintenance expenses is important. This will not only help with budgeting for future vehicle-related costs but also with claiming tax deductions. Make sure to record;
- the date,
- amount and purpose of each expense, and
- the odometer reading at the time of the expense.
Keeping accurate records will also help with identifying any potential issues with the vehicle and scheduling regular maintenance to prevent costly repairs down the line.
Use Technology to Simplify the Process
Keeping track of vehicle logbooks can be tedious and time-consuming, but technology can make it much more manageable. Many apps and software programs are available that can help automate the process, making it more efficient and accurate. Some popular options include TripLog, MileIQ, and Everlance. These tools can automatically track mileage, record expenses, and generate reports, saving you time and reducing the risk of errors. Consider using technology to simplify the process and make vehicle log bookkeeping less stressful.
When does FBT Apply on Vehicle Use?
Just because your business buys a motor vehicle and is used almost exclusively as a work vehicle does not mean that the car is exempt from FBT. If you use the vehicle for private purposes – pick the kids up from school, do the shopping, use it freely on weekends, garage it at home, or your spouse uses it – FBT is likely to apply. The private use of work vehicles is firmly in the sights of the ATO and has been for some time.
Private use is when you use a car provided by your employer (this includes directors) outside of simply travelling for work-related purposes.
Methods to calculate the FBT liability
While there are two methods to calculate the FBT liability on the private use of a car, the choice of method can result in very different FBT liabilities. Using the logbook method may provide a better result, especially this year if the work vehicle has not been used at all and garaged at or near the employee’s home.
This is because if your business keeps valid logbook/odometer records and is eligible to use the logbook method, the ATO will accept that an FBT liability won’t arise if the car:
- Has not been driven at all during the period, even if it has been garaged at home; or
- Has only been driven briefly to maintain the car.
Instead, by comparison, if the statutory method is used, the FBT liability could be much higher. This is because the FBT calculation under this method will include the days when the car has been garaged at home and is taken to be available for the employee’s private use (regardless of whether or not the employee has permission to use the car privately). Similarly, where the place of employment and residence are the same, the vehicle is taken to be available for the employee’s private use.
Please see this guide for more information about the methods to calculate FBT, or contact us for assistance.