The logbook method lets you claim a work-use percentage of the actual costs of running your car, worked out from a logbook of the trips you make to earn your income. You record every journey over a set period, compare your work kilometres against your total travel, and apply that percentage to fuel, insurance, servicing, interest and decline in value.
This guide is written for sole traders, employees who drive for work, and small business owners who use one or two cars rather than a fleet. By the end you will know who can use the logbook method, what you need before you start, how to work out the calculation step by step, which records the ATO expects you to hold, and where the cents per kilometre method may still be the simpler choice.
It covers eligibility, calculation and record-keeping separately, because most claims that fall over do so on records rather than arithmetic.
- The logbook method claims a work-use percentage of your actual running costs, with no cap on the business kilometres you record.
- The ATO requires a logbook kept for at least 12 continuous weeks, plus odometer readings at the start and end of the period and of each income year.
- A valid logbook generally lasts five years, so one careful 12 week effort can support several returns if your driving pattern stays representative.
- You still need receipts or invoices for fuel, insurance, registration, servicing and repairs, along with the car's purchase details for depreciation.
- If you drive under about 5,000 work kilometres a year and have low running costs, the cents per kilometre method may produce a similar result with far less paperwork.
Before you start, gather four things: the car's odometer, your purchase or lease paperwork, a full income year of running cost receipts, and a blank logbook or app. With those in hand, the logbook method turns one work-use percentage into a single deductible figure.
Deductible car expense categories include fuel and oil, insurance, registration, servicing, repairs, tyres, roadside membership, loan interest and depreciation. A capital car expense such as the purchase price is never claimed outright; it enters the claim through decline in value instead.
| Cost type | Treatment under the logbook method |
|---|---|
| Fuel and oil | Claim your work-use share; the ATO accepts a reasonable estimate based on odometer records |
| Insurance and registration | Claim your work-use share of the annual expense |
| Servicing, tyres, repairs | Claim your work-use share of each invoiced expense |
| Purchase price of the car | Not an immediate expense; claimed as decline in value over the asset's effective life |
| Fines and private travel | No claim, regardless of how the expense arose |
A 12 week logbook is a continuous sample of your driving that the ATO accepts as representative of the full year. Pick a start date, take an odometer reading that day, then record each work trip with the date, the reason, the start and finish odometer figures and the kilometre travelled.
At the end of the twelfth week, take a closing odometer reading. Your work km divided by total km gives the work-use percentage you apply to every car expense for the year.
Choose your 12 weeks carefully. A block that includes a quiet fortnight or annual leave will understate your usual pattern and shrink the deduction, while a block that excludes normal private driving will not stand up to review. Keep each fuel and service receipt as you go, and note the reason for depreciation claims in the same file. Questions about your own pattern are worth raising with a registered agent on 1300650286 or your usual adviser.
A logbook usually produces a larger claim because it has no distance cap and it recognises what the car actually costs you. The cents per kilometre method stops at 5,000 work kilometres per car and rolls fuel, insurance and decline in value into one flat rate.
Under the logbook method you apply your work-use percentage to your real spending, so a car with high finance costs, comprehensive insurance and a steep decline in value can support a materially bigger deduction on the same distance. A driver covering 18,000 work kilometres a year is simply invisible to the capped alternative.
The trade-off is effort. You need every receipt, two odometer figures at each end of the logbook period, and a further odometer reading at 30 June each year so total kilometre figures reconcile. If your percentage is low and your costs modest, the extra work may not change the outcome much.
The two methods differ on three points: the distance limit, the paperwork, and whether actual costs matter. The cents per kilometre method pays a set rate for each work kilometre up to 5,000 kilometres per car per year, needs no receipt for running costs, and only asks you to show how you worked out your kilometre count. The logbook method has no kilometre cap, needs a 12 week log plus an opening and closing odometer figure, and claims a percentage of what you genuinely spend on fuel, insurance, servicing and repair work.
As a rough guide, drivers under 5,000 work kilometres with a cheap, older car often land close to the same answer either way. Drivers above that distance, or with a newer car carrying finance and fast depreciation, are generally better off with a logbook. You can work both out before deciding, and our tax deduction calculator with every formula shown sets out the total kilometre inputs each method uses. A larger car expense base usually favours the logbook deduction.
The car method is available to anyone claiming for a car they own, lease or hire under a hire purchase agreement, where the travel relate directly to earning assessable income. That covers sole traders, employees driving between work sites, and directors using a company-provided car under some arrangements.
Vehicles designed to carry one tonne or more, or nine or more passengers, sit outside the car rules entirely. For those, you claim actual costs and still keep a log of use, but neither the logbook percentage rules nor the cent per kilometre rate applies.
You need a logbook whenever you want to calculate a work-use share above the capped alternative, or when the per kilometre method cannot capture your kilometre volume. Without a logbook you have no total kilometre base and no odometer evidence to support the split.
A compliant logbook is defined by the fields it captures, not the format. Paper diaries, spreadsheets and phone apps are all acceptable provided each entry shows the date, the start and end odometer figures, the kilometre travelled and the reason the trip was business relate.
Spreadsheets suit people who want to calculate the percentage themselves and audit their own formulas. Apps that log trips from GPS reduce missed entries, but review the auto-classification, because a mislabelled private trip inflates the claim and weakens the whole 12 continuous week sample.
Whatever tool you pick, check three things. It must total work and private kilometre columns separately, hold entries for five years, and export to a readable file. A template that cannot produce a defensible summary undermines the deduction even where the car method otherwise fits better than the cent per kilometre or per kilometre method. Trips that do not relate to income earning stay out.
The method is a calculation approach that applies a recorded work-use percentage to your actual car running costs. The ATO requires the logbook to cover at least 12 continuous weeks, and the period must be representative of your travel for the whole year.
To use the logbook approach in practice, choose a start date within the income year, take an odometer reading that day, record every trip for 12 weeks straight, then take a closing reading. Divide your business kilometre total by total kilometres to get the percentage, and apply it to fuel, insurance, registration, servicing, interest and decline in value. If you buy the car partway through the year, your 12 weeks can start on the purchase date and the claim is apportioned for the period you held it.
People who drive well beyond the capped alternative, or who run a car with high fixed costs, are the ones who benefit most from keeping a week logbook. The reason to use the logbook approach is simple: it reflects real spending rather than an average.
A logbook generally stays valid for five income years, provided your pattern of use does not change materially. If you change jobs, move house or switch cars, start a fresh one. The ATO expects each new car to have its own car expenses method record.
Every entry needs five data points: the trip date, the starting odometer reading, the closing reading, the kilometres travelled and the purpose of the trip. "Business" alone is not enough; name the client, site or task so the ATO can see the connection to your income.
Alongside the trips, keep the logbook period dates, the odometer figures at the start and end of each income year, and the receipt or invoice for every running cost. Registration renewals, insurance schedules and servicing invoices all support the car expenses method calculation.
To calculate the work-use share, divide business kilometres by total kilometres. Then calculate each claim by applying that percentage to the relevant cost. A novated lease method claim follows the same evidence standard, with the lease documents added to the file.
Keep all of it for five years from the date you lodge, as the ATO directs.
Decline in value is claimed by working out the annual depreciation on the car, then applying your logbook percentage to that amount. You cannot claim the purchase price outright, and you cannot claim depreciation at all under the cent per kilometre alternative, which is one of the clearest advantages of keeping a logbook.
Start with the car's cost, capped by the car limit that applies in the year you first use it. Choose either the prime cost or diminishing value approach, then calculate the yearly amount over the effective life and apportion it by work use. A novated lease method claim differs again, because lease payments rather than ownership drive the treatment, so the exact circumstance matters.
Your odometer reading history and kilometre travel records support the apportionment. Repair invoices sit separately as running costs, not depreciation. For asset-specific questions, speak with a registered agent or call 1300661508. Our home and assets tax deductions guide covers depreciating assets more broadly. Every odometer figure matters here.
Eligibility rests on using a car to earn income; calculation rests on a 12 continuous week work-use percentage applied to actual costs; record-keeping rests on trip entries, odometer figures and receipts held five years. Deductit publishes the ATO rule and formula behind each deduction so you can check your own figures.
How to do logbook method ATO?
You start by taking an odometer reading, recording every trip for at least 12 continuous weeks with the date, purpose, opening and closing readings and distance, then taking a closing reading. Divide work kilometres by total kilometres to get your percentage, and apply that percentage to your fuel, insurance, registration, servicing, repairs, interest and decline in value. Keep the receipts that prove each cost.
Can I claim 5000 km without a logbook?
Yes. The cents per kilometre method allows up to 5,000 work kilometres per car each year without a logbook, but you must still show how you arrived at the count, such as a diary of trips or a record of a regular route. It pays a flat rate that already includes depreciation, so no separate depreciation claim is available.
What are the rules for logbooks in Australia?
The logbook must run for at least 12 continuous weeks, must be representative of your year, and generally remains valid for five income years unless your use changes. Each car needs its own logbook, and you must hold odometer readings at the start and end of each income year.
How to calculate your log book?
Divide your work kilometres by your total kilometres and multiply by 100. If you drove 12,000 kilometres in total and 7,200 for work, your work use is 60 per cent, and you claim 60 per cent of each deductible running cost. Check your figures against the rules in the Australian deductions library.
How to do log book method?
Yes, keep them. The logbook proves the work-use percentage, while receipts and invoices prove the amounts you spent. Without both, there is nothing for the percentage to apply to.
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