Vehicle Log Book ATO Rules Australia: Complete Guide 2026

Quick Answer

A vehicle logbook must cover a continuous 12-week period and record every trip — date, destination, purpose, and odometer readings. You must keep it for 5 years from when you lodge your tax return. The logbook method lets you claim the business-use percentage of all actual car expenses including fuel, insurance, registration, and depreciation.

The Two ATO Methods for Claiming Car Expenses

The ATO allows two methods for claiming car expenses as a tax deduction: the cents per kilometre method and the logbook method. Understanding the difference is the first step before you start any record-keeping.

The cents per kilometre method pays a flat rate — $0.88 per kilometre for the 2024–25 income year and $0.99 per kilometre for 2025–26 — up to a maximum of 5,000 business kilometres per car per year. No receipts are required, but you do need to be able to explain how you calculated the business kilometres if the ATO asks. The maximum deduction under this method in 2025–26 is $4,950. For most people who use their car regularly for work, this caps out quickly.

The logbook method has no kilometre cap. It allows you to claim your actual car expenses — fuel, oil, tyres, servicing, registration, insurance, loan interest, and depreciation — multiplied by the percentage of time the car was used for business. If your car costs $12,000 per year to run and your logbook shows 65% business use, you can claim $7,800. That is why the logbook method is almost always the better option for anyone who relies heavily on their vehicle for work.

What Your ATO Logbook Must Actually Include

The ATO is specific about what a valid logbook contains. A note in your phone or a rough diary does not meet the standard. Every single trip — including private ones — must be recorded during the 12-week logbook period.

For each business trip, you must record: the date, the odometer reading at the start of the trip, the odometer reading at the end of the trip, the number of kilometres travelled, the destination, and the reason the trip was business-related. Private trips during the logbook period only require the date, start and end odometer readings, and the total kilometres. You do not need to record a reason for private trips, but they must still appear in the logbook so the ATO can verify your business-use percentage.

At the end of the 12-week period, you total up the business kilometres and divide by the total kilometres driven. That percentage is your logbook business-use rate. You then apply that same rate to your actual car expenses for the whole income year. If the logbook period is not representative of how you normally use the car — for example, you ran a logbook during a school holiday period when you drove more for leisure — the ATO can argue the rate is inflated. Pick a 12-week window that genuinely reflects your average work pattern.

How Long Does a Vehicle Logbook Last?

One of the most misunderstood ATO rules is how often you need to run a new logbook. A logbook is valid for 5 income years from the year you completed it — provided your pattern of business use has not changed significantly.

This means if you ran a valid logbook in the 2022–23 income year showing 60% business use, you can apply that same 60% rate through to the 2026–27 income year without running another 12-week period, as long as your business travel patterns have stayed roughly the same. However, if you changed jobs, took on more clients in different locations, moved house, or started working from home significantly more, a new logbook is required because the old percentage no longer reflects reality.

You must also keep all receipts and records for the car expenses you are claiming across those 5 years. The logbook itself must be kept for 5 years from the date you lodge the tax return for the last income year in which you relied on it. So if your 2022–23 logbook is used through to 2026–27, keep it until at least 2032. The ATO can request records at any point during that window.

What Counts as a Business Trip Under ATO Rules

Not every trip in a work vehicle is a deductible business trip. The ATO definition of business use is specific, and getting it wrong is one of the most common mistakes in vehicle claims.

Trips that are deductible include: travelling between two separate workplaces, travelling from your home to a client's premises when your home is a genuine base of operations for your business, carrying bulky equipment to a work site when there is no secure storage at the workplace, and travel to pick up supplies for the business. Tradies, for example, can often justify home-to-work-site travel if they load tools and materials at home each morning — but only if the ATO accepts that home is a place of business, not merely convenient storage.

Trips that are not deductible include the ordinary home-to-work commute for employees, personal errands run during a work trip, and travel to a regular workplace. For sole traders working across multiple sites, the rules are more favourable — if you have no fixed office and move between client locations throughout the day, most of that travel is legitimately deductible. Migrant workers doing shift work at a single location generally cannot claim the commute, even if public transport is unavailable and they need their car for safety reasons. The ATO does not make exceptions based on practicality.

How to Calculate Your Car Expense Deduction

Once you have a valid logbook percentage, the calculation is straightforward. Add up every dollar spent on the car during the income year, apply your business-use percentage, and that is your deduction.

Expenses you can include: petrol and diesel, servicing and repairs, tyres, registration, compulsory third party insurance (CTP), comprehensive insurance, car wash (if the car is used for client-facing work), loan interest if the car is financed, and depreciation. Depreciation is calculated using the ATO's effective life ruling for motor vehicles — currently 8 years using the prime cost method or 25% per year using the diminishing value method. For most small business owners, diminishing value gives a larger deduction in early years. The car limit for depreciation in 2025–26 is $69,674 — you cannot depreciate above this amount regardless of what you paid.

As an example: you bought a car for $45,000, your annual running costs including depreciation come to $14,200, and your logbook shows 72% business use. Your deduction is $14,200 × 0.72 = $10,224. That is money off your taxable income — worth roughly $3,270 in tax saved if you are in the 32.5% bracket. Keep every receipt. Fuel receipts, service invoices, insurance renewals, and registration papers all need to be stored for 5 years.

Logbook Apps, Record-Keeping Tools, and the July 2026 Deadline

Paper logbooks are still valid under ATO rules, but electronic records — including smartphone apps — are accepted provided they capture all required fields. The ATO's myDeductions app (free, built into the ATO app) records trips with GPS and lets you categorise each as business or private. Third-party apps like TripLog, Driversnote, and MileIQ also work, provided you can export the data in a readable format. Whatever tool you use, back it up. A lost phone does not excuse a missing logbook.

For small business owners with employees who use company vehicles, the rules extend to fringe benefits tax (FBT). If an employee uses a business vehicle for private travel, the employer may owe FBT. A valid logbook held by the employee can reduce the FBT liability under the operating cost method — the same 12-week logbook rules apply. FBT is administered separately from income tax, and the FBT year runs 1 April to 31 March, not 1 July to 30 June.

One deadline that affects every small business owner right now: Payday Super takes effect 1 July 2026 — that is 16 days away. While not directly related to vehicle logbooks, it is a reminder that your payroll and compliance systems need to be ready before the new financial year starts. If you run payroll for any employees and also manage vehicle expense claims, this is a good time to review all your record-keeping systems together. SAB Account AI handles invoicing and payroll in the one place, which reduces the chance of missing a compliance requirement when multiple deadlines converge.

SAB Account AI tracks your business income and expenses in one place — so when tax time comes, your vehicle deduction records are ready without the last-minute scramble.

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Do I need a logbook if I only use my car occasionally for work?

If you drive fewer than 5,000 business kilometres per year, the cents per kilometre method at $0.99/km for 2025–26 is simpler and requires no logbook. For anything above that volume, or if your actual costs are high, the logbook method will almost always give you a larger deduction.

Can I use my car logbook for multiple vehicles?

No — you need a separate logbook for each vehicle you are claiming. Each logbook must cover its own 12-week period and include the specific vehicle's registration number, make, and model on the cover page.

What happens if the ATO audits my vehicle claim and I have no logbook?

The ATO will disallow the logbook method entirely and may substitute the cents per kilometre method, capped at 5,000 km. They can also apply penalties of up to 75% of the shortfall plus interest if they decide the claim was reckless or intentional.

I started a logbook mid-year. Is it still valid?

Yes, as long as it covers a continuous 12-week period within the income year and your travel during that period is representative of your normal business use. You apply the resulting percentage to actual expenses for the full income year, not just the logbook period.

Can I claim car expenses as a sole trader working from home?

Yes, if your home is a genuine place of business — meaning you have a dedicated work area, meet clients there, or your business is registered at that address. Trips from your home office to client sites or suppliers are then deductible. A commute from home to a separate employer's office is not deductible even for sole traders.

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