With April marking the start of the Fringe Benefits Tax (FBT) year, we dive into why log books are so important, and how to keep a good one!
What is Fringe Benefits Tax?
A fringe benefit is like a payment to an employee, but in a different form to salary or wages. Fringe benefits tax (FBT) is a tax paid by employers on certain benefits provided to their employees. In most cases this tax is passed onto the employee as part of the employee ‘payment’ of this fringe benefit. For FBT purposes, company directors and trust beneficiaries who work in the business and their associates are also considered employees even if not receiving a formal wage.
Fringe benefits for employees can include:
• use of a work car for private purposes
• car parking
• taxis or rideshare travel
• tolls
• gym membership
• entertainment and travel
• reimbursing an expense incurred by an employee, such as school fees
• discounted interest rate or interest free loans
• salary sacrifice arrangements
• accommodation, living away expenses, housing, board or mortgage repayments.
FBT applies to fringe benefits provided to your employees, or to your employees’ families or other associates. The FBT year runs 1 April 25 to 31 March 26.
What is a log book?
A log book is a record of all the travel made by the employee, noting the difference between personal and work travel.
A log book log is required to be recorded for 12 weeks in total. Each entry must be written in English and it must be recorded as soon as practical after the journey.
The entries must be quite descriptive e.g. who/where/why ‘Bunnings – tools and supplies for jobsite at 15 Smith Street’ not just ‘Bunnings’. The ATO have denied logbooks that don’t follow all criteria and in those cases, vehicles may be deemed 100% personal.
You can use our manual log book to keep track of your vehicle use, or you can also download and use the Driversnote app (this is ATO compliant) or similar programs, which will allow you to record the same information straight onto your phone.
Logbooks need to be kept every 5 years (the ATO now has AI tracking this!) or completed more frequently if business use % has changed dramatically (10% or more).
It is important to note that odometer readings should be kept even on a non-logbook year.
What are the benefits of keeping a log book?
1. Maximise deductions – A properly maintained logbook allows you to claim the actual business-use percentage of all your vehicle expenses such as fuel, servicing, rego, insurance, depreciation. There are two methods for claiming car costs, but the log book method requires a logbook to use.
2. Separate business and personal use – A log book helps you see exactly how much you are using your car for work. We’ll use this figure for up to five years, unless your usage changes by 10% or more.
3. Avoids ATO red flags – Vehicle claims are a common audit trigger. Having a logbook is a great first line of defence as it clearly shows all trips taken. It’s important details are thorough and detailed.
4. Easy to complete – modern trackers make logbooks less onerous than they used to be! While you can still complete a manual logbook, you can also link apps that sync to your mobile, making it easy to use.
5. Improves financial awareness – A log book reduces the guesswork of how much you actually use a vehicle, and if there are efficiencies to be found in your routes, type of vehicle and how much it costs you to run.
As you can see, there are several benefits to keeping a log book, as well as being tax compliant.
You can find our manual log book here.
If you need any support with your log book contact us on 61443370 or email office@ultimate-tax.com.au
All content, information and materials (including oral and written) delivered, broadcast, performed or disseminated at any seminars, conferences, webinars, and other public events hosted by Ultimate SK Pty Ltd trading as Ultimate Tax & Advisory (Ultimate Tax & Advisory) are of a general commentary nature only. Such content, information and materials do not constitute personal or general financial or taxation advice and should not be relied upon by the viewer for any such purposes. Ultimate Tax & Advisory does not warrant or represent that any content, information and materials is suitable for any specified purpose or for any specified individual and specifically disclaims all liability in respect of any reliance placed on any such content, information and materials by any third parties.
