Every year the same thing happens in July. People sit down to do their return, look at how much they actually drove for work, and realise the logbook they meant to keep never happened. They claim cents per kilometre, or nothing, and promise themselves next year will be different.
This page is for the version of you that wants next year to actually be different. The short version: you cannot fix last year, you can fix this one, and the fix takes twelve weeks that you can start today.
Why last year cannot be fixed
The logbook method works from a business-use percentage measured over at least 12 continuous weeks, and in the first year you use the method that period has to be kept during the income year you are claiming for. Source: ATO, logbook method.
That rules out the two things people reach for after the fact.
You cannot reconstruct a period from memory. Each journey entry needs the purpose, the destination, the odometer at the start and the end, and the kilometres, and it has to be written up at the end of the journey or as soon as possible afterwards. A spreadsheet assembled in October from calendar invites and fuel receipts is not that. It may be an honest estimate, and it is still not a logbook.
A logbook kept now does not reach back to the year that ended on 30 June. Twelve weeks recorded between now and December belong to the income year you are driving in, not the one you are lodging for. So if you have no logbook for the return you are about to lodge, that return is a cents per kilometre return. That is fine. It is capped, not disallowed.
If you have not lodged yet, the method calculator shows what cents per kilometre is worth for that year on your own kilometres.
What starting now actually gets you
Twelve weeks from mid September ends in early December. Start this week and the logbook is finished before Christmas, before the holidays distort your driving, and well before the end of the income year in June.
That timing matters for a reason that is easy to miss: the period has to be broadly representative of how you use the car across the year. September to December is ordinary working time for most people. The alternatives are worse. January is holidays. April onward is a scramble to fit twelve weeks in before 30 June. Now is the best window in the year, and it opens right after the moment most people realise they need it.
Once the twelve weeks are done, the percentage they produce can generally be used for the income year you kept it in and the four following income years. Twelve weeks now, five returns covered. The conditions on that are covered in how long a logbook stays valid.
The difference in what you can claim
Cents per kilometre is a single rate per kilometre, capped at 5,000 kilometres per car per year, with no requirement to keep a logbook. Source: ATO, cents per kilometre method. If you drive more than that for work, the kilometres past the cap earn nothing.
The logbook method applies your business-use percentage to what the car actually cost you to run: fuel, servicing, insurance, registration, interest on a loan, and decline in value. There is no cap. The claim is limited only by your real costs and your real percentage.
Which one pays more depends on your numbers, and for a lot of people who drive under the cap cents per kilometre is the right answer and the logbook is not worth the effort. The calculator will tell you which side you are on. What this page is for is the other group: the people who drove well past 5,000 kilometres for work last year, claimed as if they had not, and would rather not do that again.
What to record from the first day
The requirements are short, and every one of them matters. Full detail in what an ATO logbook has to contain; the working list is this.
On day one, before you drive anywhere:
- the date the period starts
- the odometer reading
For every journey during the twelve weeks:
- the date
- the reason for the journey, which means the actual reason, not “work”
- the destination
- the odometer at the start and at the end
- the kilometres
On the last day:
- the date the period ends
- the odometer reading
The two period readings are the ones you cannot recover later. End reading minus start reading is your total kilometres for the period, and that is the denominator of the whole percentage. Take a photo of the dashboard with the date visible on both days.
You also record private journeys. Not in detail, but the gaps between one work journey’s end reading and the next one’s start are your private kilometres, and a logbook where every kilometre is work-related is a logbook that gets questioned.
The mistakes that undo a fresh start
Starting is easy. These are the four ways the twelve weeks come undone.
- Purposes that are categories. “Work”, “client”, “site” forty times over describes nothing. “Quote, Henderson job, Cranbourne” describes a deductible trip. Write the reason a stranger could check.
- Pausing. A quiet week is not a reason to stop. The period must run continuously, and the quiet days sit inside it as low days, which is correct. Stopping and restarting produces two short periods and no logbook. See does the 12 weeks have to be continuous.
- Stopping at eleven and a half weeks. Twelve weeks is a floor, not a target. Run thirteen if there is any doubt about the dates.
- Filling entries in at the weekend. The rule is at the end of the journey or as soon as possible afterwards. Odometer readings recalled on Sunday for a Tuesday trip are guesses, and a logbook full of guesses is the thing the method exists to replace.
What happens after December
The twelve weeks end and the logbook is finished. The percentage it produced is what you apply to the year’s running costs at tax time.
Two obligations continue after the period ends, and both are routinely missed.
Keep the receipts for the whole year. The percentage is only half the claim. The other half is what the car cost, and that means receipts for fuel, servicing, insurance, registration and the rest, for the full income year, not just the twelve weeks. Fuel and oil can be estimated from odometer records if receipts are missing, but everything else needs the paper.
Take odometer readings at 30 June and 1 July. Every year you use the method, you need the reading at the start and end of the period you held the car in that year. For most people that is one reading on the evening of 30 June that does double duty as the opening reading for 1 July. Details in what odometer readings you need.
If you are reading this in a different month
The advice does not change, only the arithmetic.
- July to September: the best window. Start now, finish by December.
- October to January: still comfortable. Avoid starting a period that is mostly Christmas leave, since that is the least representative twelve weeks in the year. Early October or late January both work.
- February to early April: start immediately. Twelve weeks needs to fit before 30 June to be clean, and the last safe start is the first week of April.
- Mid April onward: the ATO allows a period that started less than twelve weeks before 30 June to run on into July in some circumstances, but you are now relying on a rule with conditions attached, and the right person to confirm it applies to you is a registered tax agent, not a web page.
Whatever month it is, the answer is not “next July”. It is the date you take the first odometer reading.