Do you have a Logbook?
If you claim your vehicle as a business expense then there’s some changes which require you to take action.
The Australian Tax Office (ATO) have recently warned about tightening-up on their approach towards people who own vehicles through their businesses – particularly, employers and tradies.
Even if your company or work car has been exempt from Fringe Benefits Tax previously, these days you may need to prove that any private usage is “minor, infrequent and incidental”. This includes vehicles that carry over one tonne and were previously exempted.
According to the ATO, any travel that deviates from a normal route between home and work (by more than 2kms) will be considered private use.
Times have changed…
The ATO are cracking down on exempt car and residual benefits. This catches any ute, dual cab ute or van provided to employees (including business owners) for use in a business.
The ATO have now issued clear rules that taxpayers should follow to ensure they will not be targeted for audit, especially if claiming 100% business use.
This new Practical Compliance Guideline PCG 2018/3 will apply to this FBT year & onwards.
Essentially you do not have to keep a logbook to support the business use of your vehicle if you meet ALL these requirements:
the vehicle is provided to perform work duties
employer takes all reasonable steps to limit private use of the vehicle and have measures in place to monitor such use
the vehicle has no non-business accessories
the vehicle had a GST-inclusive value less than the luxury car tax threshold at the time the vehicle was acquired (2022-2023 financial year is $71,849, up from $69,152 from the previous financial year)
the vehicle is not provided as part of a salary packaging arrangement
your employee uses the vehicle to travel:
between their home and their place of work and any diversion adds no more than 2km to the ordinary length of that trip
no more than 750km in total for each FBT year for multiple journeys taken for a wholly private purpose, and
no single, return journey for a wholly private purpose exceeds 200km.
What do I need to do about this?
If you meet every condition above, then you do not need to do anything.
If you do not meet every condition above, then you should keep a log book for a continuous 12 week period to support your business use claim. More info about logbooks here.
You can purchase a paper log book from Officeworks or Newsagents, or you can use the ATO myDeductions app. Start your log book BEFORE 31 March and continue to keep a logbook into the next year so it covers the required 12 weeks.
If you establish your business-use percentage using a logbook from an earlier year, you must keep that logbook and maintain odometer readings for 1 April and 31 March the following year.
For exempt vehicles, travel from home to place of work is considered BUSINESS use. This is different from cars generally, where travel from home to place of work is considered PRIVATE.In addition to 1 or 2, please download and fill in the vehicle summary & return it to our office by 13 April. There’s a completed example of the form here.
The Practical Compliance Guideline PCG 2018/3 is quite easy to read, and contains simple examples to help understand these concepts & apply them practically.
Our Recommendations…
In summary, we recommend that where a dual cab ute or work vehicle is owned and you wish to claim expenses either in your business or as an employee, you MUST prepare a 12 week Logbook to prove the percentage portion of business use.
Doing so will provide you extra protection if the ATO decides to audit you or argue that you are not entitled to a motor-vehicle claim due to it not being predominately for business purposes.
If you need some help or advice in this area, ensure to give us a call.
