How to use your company vehicle without tax issues: business use logbook explained
One of the great advantages you can reap as an Australian business is to use your vehicle to run the business. It can be tax-efficient for you when you follow the rules and regulations of the ATO. If you use the car primarily for business purposes, you are entitled to claim deductions. However, for this, you need to keep a correct approach, which is none other than the logbook method. Though it’s a reasonably simple method to record costs related to a vehicle. But you might be a little bit confused about the way to record expenses. That’s where you need the consultation of Business Tax Accountants South Morang to meet your needs.
Know the Tax Regulations for Using Business Vehicles
It is necessary to meet ATO compliance for using business vehicles to claim tax deductions. Any wrong mentioning and claiming of expenses leads to scrutiny and hefty penalties. So, here are the regulations that you should know with the help of Tax Accountants for Small Business South Morang.
Tax Allegations of FBT
If an employee uses your company vehicle for private use, it will be considered a fringe benefit. Thus, being an employer, you have to pay fringe benefit tax. However, you are not liable for FBT if the private use of a business vehicle is limited to:
- Travel Between Home and Office
- Travel for Performing Work-related Duties
- Minor and Infrequent Non-work-related Use
Log or Cents Per KM
South Morang Business Tax Services of experts enable you to claim deductions based on expenses recorded for business. Thus, you can choose between the logbook and the cents per km method. With a logbook, there’s no limit on kilometers for those who run the vehicle. The cents per kilometer method is limited to 5000 km for each car and each year. You can claim the expenses at a set rate of 88 cents per kilometer. If you opt for a logbook, you should maintain it as per ATO compliance, such as:
- Starting and Ending Date of Traveling
- Starting and Ending Odometer Reading for each Trip
- Distance Travelled for the Specific Business-related Trip
- Mention Detailed Reason for Traveling, e.g., Client’s Meet
- Total Kilometers during Logbook period and Odometer readings
Key Expense Recording for Logbook Method
Alongside maintaining a logbook, South Morang Business Tax Accountants advise maintaining written evidence of expenses such as:
- Costs Incurred for Fuel and Oil
- Cost for Insurance, Registration, and Maintenance
- Expenses incurred for servicing and repair of the car
- Records of lease payments and interest paid on the car loan
- Records of new car purchased and depreciation of the vehicle
Consult with Experts to Claim Work-related Vehicle Expenses
Your logbook must have consistent records of 12 weeks during the income year. It must represent and indicate the costs incurred by you during the travels. If you are still confused and need expert help, consult Kirpa Tax. We offer Business Tax Services in South Morang and prepare tax returns. Thus, reach out to us and get a top-notch guide regarding logbook maintenance and claiming deductions.
FAQ’s
What is the logbook method for businesses in SM?
It is a reliable way to keep business and personal records of vehicle expenses. Kirpa Tax offers the right guidance about logbook maintenance to businesses.
Why should I prepare a logbook as per the ATO?
Maintaining a logbook as per ATO requirements is necessary to meet tax compliance for your business. Seek Business Tax Services in South Morang from expert accountants.
Can I claim fuel expenses without the logbook method?
You can consider using cents per kilometer, but it is limited to 5000 km only. Also, you can claim expenses as per the set rate of 88 cents per kilometer.
How can I claim depreciation with the logbook method?
You can apply the business usage percentage to the vehicle’s depreciation value. Consult Business Tax Accountants South Morang Kirpa Tax for claiming depreciation of a vehicle.
Should I maintain a logbook for each vehicle of business?
You should maintain a separate logbook for each vehicle you use for business purposes. It simplifies the expenses calculation to claim the deductions during tax preparation.
When should I keep expense records in the logbook?
Tax Accountants for Small Business South Morang advise maintaining a logbook as the trip happens. You should mention the date, purpose of travel, and specific costs in the logbook.
To whom should I consult for guidance on the logbook?
Kirpa Tax is the best accounting firm offering South Morang Business Tax Services. You can consult these specialists to get the right advice on the logbook method of claiming vehicle expenses.