Claiming work-related car expenses is one of the most common tax deductions in Australia but it’s also one of the most misunderstood. Many taxpayers assume that once they’ve completed a logbook, they’re covered for five years without needing to revisit it.

However, according to guidance from the Australian Taxation Office (ATO), this assumption can lead to incorrect claims, audit risk, or missed deductions if your circumstances change.

This guide explains how motor vehicle logbooks work, when you need a new one, and how to stay compliant while maximising your tax position.

What Is a Motor Vehicle Log Book and Why It Matters

A motor vehicle logbook is a record of your work-related and private travel over a continuous 12-week period. It is used to determine the business-use percentage of your vehicle, which is then applied to calculate your deductible car expenses.

The ATO allows you to rely on a valid logbook for up to five years, provided your usage pattern remains consistent. However, the key requirement is that the logbook must accurately reflect your current work-related travel.

If your circumstances change and your logbook is no longer representative, continuing to use it may result in over-claiming or under-claiming deductions.

When You Must Start a New Log Book (ATO Requirements)

Although a logbook can remain valid for five years, the ATO requires a new one if there are material changes to your circumstances.

You should start a new logbook if:

• You change jobs or job roles
• You move house or change your primary workplace
• Your work-related travel patterns significantly increase or decrease
• Your duties change, requiring more or less driving

These changes affect your business-use percentage, which directly impacts your claim. Using an outdated logbook in these situations may not satisfy ATO requirements.

Using Multiple Vehicles: Log Book Rules Explained

If you use more than one vehicle for work purposes, the ATO requires separate logbooks for each vehicle.

Each logbook must:

• Cover the same 12-week period
• Accurately reflect the usage of that specific vehicle

This ensures consistency and prevents discrepancies when calculating deductions across multiple cars.

Buying a New Car: Can You Use Your Old Log Book?

If you purchase a new vehicle, you may still be able to rely on your previous logbook—but only under specific conditions.

The ATO requires you to:

• Ensure your usage pattern remains substantially the same
• Make a written nomination confirming that the old logbook is still representative
• Complete this before lodging your tax return

If your usage has changed, you will need to complete a new 12-week logbook for the new vehicle.

Log Book vs Cents Per Kilometre Method: Key Differences

The ATO provides two main methods for claiming car expenses:

Log Book Method

• Based on actual expenses (fuel, insurance, depreciation, etc.)
• Requires a valid logbook
• Typically results in larger deductions for high work-related use

Cents Per Kilometre Method

• Fixed rate per kilometre (set annually by the ATO)
• Simpler, but limited to a maximum number of kilometres
• No logbook required, but you must be able to justify your estimate

Choosing the right method depends on your usage and record-keeping habits.

Employer-Provided Vehicles and Novated Leases: What You Can’t Claim

A common mistake is attempting to claim deductions on a vehicle that you do not own.

If your car is:

• Provided by your employer, or
• Salary packaged through a novated lease

you generally cannot claim work-related car expenses under either the logbook or cents per kilometre method.

This is because the costs are typically already covered through employer arrangements or salary packaging benefits.

Electric Vehicles (EVs) and Hybrid Cars: ATO Guidelines

The ATO has introduced specific guidance for electric vehicles (EVs) and plug-in hybrids, particularly regarding home charging costs.

Electric Vehicles

• You can use the ATO’s home charging rate (e.g. 4.2 cents per km, increasing to 5.47 cents for 2026–27)
• This provides a simplified method based on odometer readings
• If you use this rate, you cannot separately claim commercial charging costs

Plug-in Hybrid Vehicles

• A different calculation method applies
• You must apportion electricity costs using an ATO-approved formula

These rules highlight the importance of choosing the correct method and maintaining supporting records.

Record-Keeping Requirements: Staying ATO Compliant

To support your claims, the ATO requires accurate and complete records, including:

• A valid 12-week logbook
• Odometer readings at the start and end of each financial year
• Receipts for car expenses (if using the logbook method)
• Evidence of work-related travel

Failure to maintain proper records can result in denied deductions or penalties.

Common Mistakes to Avoid with Log Books

Many taxpayers fall into avoidable traps when claiming car expenses. These include:

• Using an outdated logbook that no longer reflects actual usage
• Failing to start a new logbook after a job or lifestyle change
• Claiming expenses on employer-provided vehicles
• Overestimating work-related travel without supporting evidence

Avoiding these mistakes is essential to ensuring your claims are both accurate and defensible.

Key Takeaways: Getting Your Log Book Right

Motor vehicle logbooks remain one of the most effective ways to maximise tax deductions—but only when used correctly.

To stay compliant and optimise your claim:

Ensure your logbook reflects your current usage patterns

Start a new logbook when circumstances change

Maintain accurate and complete records

Seek professional advice if unsure about your eligibility

Conclusion: Stay Accurate, Stay Compliant, Maximise Deductions

ATO scrutiny around work-related expenses continues to increase, and motor vehicle claims are a key focus area. While the logbook method can deliver significant tax benefits, it also requires discipline and accuracy.

If your work, travel patterns, or vehicle arrangements have changed, now is the time to review your logbook. A small update today could prevent costly mistakes at tax time—and ensure you’re claiming exactly what you’re entitled to.

Source: ATO

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

---

General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

As the Fringe Benefits Tax (FBT) year draws to a close on 31 March, many Australian businesses are reviewing their obligations, particularly when it comes to work vehicles. This is an area under increasing scrutiny by the Australian Taxation Office (ATO), with many employers unintentionally misreporting or failing to report fringe benefits correctly.

Providing employees with a work vehicle may seem straightforward, but when private use is involved, FBT obligations quickly become more complex. Getting it wrong isn’t just an administrative issue, it can lead to significant penalties, compliance risks, and unintended tax consequences for both employers and employees.

Understanding FBT on Work Vehicles

Fringe Benefits Tax is governed by the Fringe Benefits Tax Assessment Act 1986 and applies when employers provide non-cash benefits to employees, including the use of vehicles for private purposes.

When Does FBT Apply?

FBT may apply if:

• An employee is allowed to use a work vehicle for private travel
• The vehicle is garaged at or near the employee’s home
• The employer owns or leases the vehicle

Importantly, the ATO considers a vehicle to be available for private use even if the employee does not actively use it for personal trips garaging it at home is enough to trigger FBT implications.

Electric Vehicle FBT Exemption: What You Need to Know

The introduction of FBT exemptions for electric vehicles (EVs) has created opportunities for tax savings—but only if strict criteria are met.

Eligibility for EV FBT Exemption

Employers may qualify for an exemption where:

• The vehicle is owned or leased by the employer
• It is provided to a current employee
• It is a zero or low emissions vehicle (battery electric, hydrogen fuel cell, or plug-in hybrid)
• It was first held and used on or after 1 July 2022
• Its value is below the luxury car tax threshold for fuel-efficient vehicles ($91,387 for 2025–26)

Important Update: Plug-In Hybrid Vehicles No Longer Exempt

From 1 April 2025, plug-in hybrid electric vehicles (PHEVs) are generally no longer eligible for the FBT exemption.

Limited Transitional Relief

The exemption may still apply if:

• The arrangement was in place before 1 April 2025, and
• There is a financially binding commitment to continue providing the vehicle

Any change or break in that agreement after this date will usually result in the exemption no longer applying.

Common FBT Mistakes Businesses Make with Work Vehicles

The ATO has identified several recurring compliance issues, many of which stem from misunderstandings or poor record-keeping.

Key Risk Areas

Businesses often:

• Fail to lodge FBT returns despite providing vehicles
• Assume dual-cab utes are automatically exempt (they are not)
• Do not maintain valid logbooks or odometer records
• Incorrectly classify private use as business use
• Overlook that home garaging counts as private availability

These errors can significantly increase FBT liabilities and trigger ATO audits.

Record-Keeping: The Key to FBT Compliance

Accurate documentation is critical when it comes to FBT.

What You Need to Maintain

• Valid logbooks showing business vs private use
• Odometer readings
• Clear classification of vehicle type (car benefit vs residual benefit)

If records are incomplete or invalid, the ATO may apply the statutory formula method, which often results in a higher tax bill.

ATO Crackdown: Data Matching and Penalties

The ATO is increasingly using advanced data analytics to identify non-compliance.

What They’re Looking For

• Businesses not lodging FBT returns
• Inconsistent reporting across tax obligations
• Misuse of exemptions

Real Consequences

In one case involving a Melbourne restaurant:

• Failure to lodge returns and maintain records resulted in a liability of $938,000
• This included base tax, a 75% penalty for reckless behaviour, and interest charges

This demonstrates that the ATO is prepared to take strong action where businesses fail to meet their obligations.

How to Stay Compliant and Avoid FBT Issues

Review Vehicle Usage

Ensure you clearly distinguish between business and private use.

Check Eligibility for Exemptions

Particularly for electric vehicles—rules are evolving and must be applied carefully.

Maintain Accurate Records

Up-to-date logbooks and documentation are essential to support your claims.

Lodge FBT Returns on Time

Even if you believe no FBT is payable, lodging may still be required.

Seek Professional Advice

FBT rules can be complex getting advice early can prevent costly mistakes.

Conclusion: Don’t Let FBT Errors Cost Your Business

FBT on work vehicles is an area where small oversights can lead to large financial consequences. With the ATO increasing its focus on compliance, now is the time for businesses to review their reporting, documentation, and assumptions.

By understanding the rules, maintaining proper records, and staying proactive, you can minimise risk, ensure compliance, and avoid unnecessary penalties while also giving your employees confidence that their tax obligations are being handled correctly.

Source: ATO

Ends

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

---

General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.