A car logbook or a vehicle logbook is an important and helpful tool, which acts as a proof of ownership over a specific car along with the usage details that are associated with it. These include the fuel costs, mileage and so on, which help immensely in the future. A logbook is highly significant when purchase or sale of vehicle is done. Someone who does not possess a car logbook is considered suspicious in terms of his actions.
It is essential that all the details about your vehicle are stored and saved timely to avoid confusion at the end of the day when you need to claim a tax return. It is observed how people often forget about the car logbook or in other cases confuse it as only being a source of proof that you own the car whereas this system goes far beyond it.
Car logbooks help tremendously in deducing taxes annually. It is therefore very important for everyone to know about the working and usage of a car logbook.
Car logbook method is the new trend that has hit the masses which encompasses the usage of the car upon which a significant claim can be made. It is a little time consuming at first but its effects are long lasting which means if you are not keeping a record you are certainly missing out on opportunities of possible tax deductions.
The ATOs have two ways of deducting taxes, which are as follows:
- Method 1 – Cents per kilometer
- Method 2 – LogBook method
Method 1 is an easy approach but does not benefit fully in the long run. It works on the principle of having a fixed standard amount of cents associated per every kilometre travelled. Multiplying the cents with the kilometers travelled gives us the maximum deduction that is possible. Now this is a very tedious task, which requires utmost concentration.
On the other hand, method 2 claims a greater deduction is made as this logbook method is determined over a period of 12 weeks. Your logbook must contain all the information about all your trips, may they be professional or private. This includes:
- Date of journey
- Starting time and respective finishing time
- Kilometres travelled
- Purpose of the journey
- Business use for that time period
Initially it may seem as a more time consuming and extensive form of data collection but once you get the hang of it, it becomes worth it at the time of the tax filing as this effort results in a greater tax return. If you carefully fill out your logbook for 12 weeks consistently, you may only have to revisit your logbook after 5 years.
Another challenge faced by many individuals is regarding the calculation of usage. To calculate this simply just divide your business kilometres used by the total kilometres and multiple it by 100. The percentage obtained after this calculation is equivalent to the claim of your vehicle expenses for that respective year.