Business-use percentage: keeping a logbook that holds up

Why business use matters so much

Almost every tax benefit of a business vehicle is scaled by how much it’s used for business:

• GST credits on the purchase are generally claimed for the business-use share.
• Depreciation is claimed for the business-use share.
• Running costs — fuel, servicing, registration, insurance, finance charges — are deductible for the business-use share.

A vehicle used 90% for business delivers far more tax value than one used 40%. Getting the percentage right, and being able to prove it, is the foundation.

Which method can your business use?

The ATO’s guidance on motor vehicle expense calculation methods depends on the business structure and the vehicle:

Business structure	Cars	Other vehicles (utes and vans designed for goods, trucks)
Sole trader	Cents per kilometre or logbook method	Actual costs
Partnership (with at least one individual partner)	Cents per kilometre or logbook method	Actual costs
Company	Actual costs	Actual costs
Trust	Actual costs	Actual costs

For companies and trusts, private use by employees — including directors — is dealt with through FBT rather than by reducing the deduction.

The ATO’s logbook rules

For sole traders and partnerships using the logbook method for a car:

1. Keep it for at least 12 continuous weeks in the income year.
2. Record when the logbook period starts and ends.
3. Record the car’s odometer readings at the start and end of the period.
4. Record total kilometres travelled during the period.
5. For each business journey, record the reason, the start and end dates, and odometer readings at the start and end.

Each logbook is valid for five years. You can start a new one at any time — sensible if your work pattern changes, like moving from office-based work to site visits.

Choosing a representative 12 weeks

The logbook should reflect a normal pattern of use. Avoid choosing a period that’s unusually busy or unusually quiet. If your work is seasonal, think about which 12 weeks genuinely represent the year, and discuss it with your accountant.

Working out the percentage

The arithmetic is simple:

Business-use percentage = business kilometres ÷ total kilometres × 100

Illustrative only: if a logbook shows 6,000 business kilometres out of 7,500 total over 12 weeks, business use is 80%.

Our free business-use percentage helper does this for you and shows how the percentage splits a year’s running costs into business and private portions.

Tips for a logbook that holds up

• Use an app or a notebook in the vehicle — whichever you’ll actually use every trip.
• Write the purpose clearly — “site visit, client name/suburb” beats “work”.
• Keep fuel and service receipts for the actual costs side.
• Note odometer readings at the start of each financial year, even outside the logbook period.
• Keep the logbook for the full five years it’s relied on, plus the record-keeping period after.

Business use and finance

Business vehicle finance is for business purposes. Lenders don’t usually ask for your logbook, but they’ll want to understand how the vehicle will be used. If a vehicle is mostly personal, business finance probably isn’t the right fit. If it’s mostly business, a strong business-use figure supports both your tax position and the finance story.

Illustrative example: a rideshare driver’s first year

Illustrative only. A rideshare driver registers an ABN and GST, finances a hybrid sedan through a chattel mortgage, and starts a logbook on day one. After 12 continuous weeks, his logbook shows 82% business use. His accountant uses that figure for his GST credits and car expenses, and he diarises a reminder to start a new logbook if his driving pattern changes. See rideshare and taxi finance.

What changes if business use drops?

Business use isn’t fixed forever. A change of role, a new office closer to home or a family car being sold can all shift how a vehicle is used. When that happens:

• Start a new logbook. The ATO allows you to start a new one at any time, and a logbook that no longer reflects reality won’t support your claims.
• Tell your accountant. If a vehicle’s business use falls a long way, there can be GST adjustments to consider.
• Revisit the finance. If a business vehicle has become mostly personal, it may make sense to restructure how it’s held and financed.

Common logbook mistakes

Mistake	Better approach
Filling it in from memory at year end	Record each trip on the day
Writing “work” as the purpose	Note the client, site or reason
Choosing an unusually busy 12 weeks	Pick a period that reflects normal use
Forgetting the start and end odometer	Photograph the odometer on day one and day 84
Losing receipts	Keep fuel, service and repair receipts together

Logbook apps versus paper

Both work, as long as they record what the ATO requires. Apps can use GPS to log trips automatically, which saves time, but check that each business trip has a purpose recorded. Paper logbooks are fine too — keep one in the glovebox and make filling it in part of your routine.

Getting the vehicle that fits your business

If you’re buying a vehicle that’ll be used mostly for business, tell us about it and we’ll explain the structures that suit — the enquiry takes about a minute. For cars specifically, see business car finance.

There’s no credit check when you first enquire. One specialist handles your details instead of shopping them around, and that person calls you to understand the vehicle and how it’ll be used. An honest estimate of business use on the form helps us recommend the right finance first time. Get started.