Keeping a motor vehicle logbook is a pain, but a smartphone camera with location and time stamping makes it much easier.
Of the four methods available to calculate car expense deductions, the logbook method can be the most generous. The ATO requires a logbook for 12 weeks containing details of:
- when the logbook period begins and ends
- the car’s odometer readings at the start and end of the logbook period
- the total number of kilometres travelled in the logbook period
- the number of kilometres travelled for work activities based on journeys recorded for the period in the logbook. In recording the journeys, you need the start and finishing times of the journey, the odometer readings at the start and end of the journey, kilometres travelled, and the reason for the journey
- the business-use percentage for the logbook period.
By far the easiest way to keep this logbook is with a smart phone camera that time and location stamps photos, together with an app that allows note taking with photos. Evernote(great, and free) is perfect, there may be others. The aim of the game is to be able to keep the logbook without having to actually write anything, and in most cases that’s possible. Here’s how you do it:
- in Evernote or whatever electronic system you’re using, create a notebook or folder where all your photos are going to go – that becomes your logbook
- ensure time and location stamping is turned on in your camera or in the note taking software
- take a photo of your odometer at the start of your 12 weeks, that ticks off requirements 1 and 2
- take a photo at the start and end of each trip, that takes care of the requirement to record the start and end times and location
- importantly – take all “start” photos as landscape. Then remember:
“Portrait” = “P” = Personal Use
- at the end of each trip, make your shot portrait for personal use and landscape for business use
- in most cases, that’s all you’d need to do: the location and time stamp of the trip, together with this business or personal use indicator should be enough for you to identify the “reasons for the trip”. If the reasons would not be clear from this alone, consider:
- saving an electronic copy of your diary through that period to match up against photo times (and locations if needed)
- worse case, if needed, using your phone keyboard to jot down the trip reasons against the photo-note.
At the end of your 12 weeks you’ll need to pull up a blank spread sheet to add everything up and close out on requirements 3 and 5. This then becomes the logbook summary and overall business use percentage calculator. It is a pretty quick task that can even be delegated to your bookkeeper! Using the data attached with each photo record, enter each trip on separate rows, record the date and times, start and end odometer readings, calculate the difference ( = kms travelled), note whether the trip was business or personal, and possibly also the reasons if this isn’t obvious from the photo location (keep the photos for your tax records). Divide total business use kms by total kms and there you have it!
Note: Thanks to my clever ex-colleague Phil Henenberg who came up with the Portrait = Personal Use tweak that saves a lot of thumb typing and time.