As the Fringe Benefits Tax (FBT) year ends on 31 March, businesses should ensure their car mileage logbooks are up to date. Maintaining an accurate logbook is crucial for employers who provide vehicles to employees, as it can significantly impact FBT calculations and reduce tax liabilities.
Why Are Logbooks Important?
A well-kept logbook allows businesses to use the operating cost method for calculating FBT, which can often result in lower tax compared to the statutory method. The operating cost method determines FBT based on actual business use, requiring clear records of kilometres driven for work purposes versus private use. Without a valid logbook, businesses may be forced to use the statutory method, which applies a set percentage of the car’s value—often leading to higher tax.
What Should a Logbook Include?
To be valid, a logbook must:
- Cover a continuous 12-week period (and be updated every five years)
- Record the date, odometer reading, start and end locations, and purpose of each trip
- Be kept for each car used for business purposes
Additionally, keeping fuel receipts, service records, and other vehicle-related expenses supports accurate FBT claims.
Avoiding FBT Pitfalls
Without proper records, the ATO may disallow business-use claims, resulting in higher FBT and potential penalties. Employers should remind employees to update their logbooks and ensure all vehicle expenses are documented before the FBT deadline.
By maintaining a compliant logbook, businesses can minimise FBT, ensure tax efficiency, and avoid unnecessary scrutiny from the ATO. Now is the time to review your records and ensure your logbooks are in order before 31 March.
For tailored tax advice, contact your Leenane Templeton accountant to discuss the best FBT strategy for your business.