Business-use percentage helper

Why your business-use percentage matters

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, tyres, registration, insurance — are deductible for the business-use share. A vehicle used 90% for business delivers far more value than one used 40%, so getting the figure right, and being able to back it up, matters.

The ATO's logbook rules in brief

For sole traders and some partnerships claiming car expenses, the ATO's logbook method requires a logbook kept for at least 12 continuous weeks in the income year. It must record when the period starts and ends, the car's odometer readings at the start and end, the total kilometres travelled, and for each business journey the reason, the start and end dates and the odometer readings. Each logbook is valid for five years, though you can start a new one at any time.

Companies and trusts must use the actual costs method, and private use by employees — including directors — is generally handled through fringe benefits tax. Sole traders using vehicles other than cars, such as goods vans and utes designed to carry a tonne or more, also use actual costs. Our business use and logbooks page covers the detail.

Choosing a representative period

Your logbook should reflect how you normally use the vehicle. Avoid a period that's unusually busy or unusually quiet, and if your work is seasonal, choose 12 weeks that genuinely represent the year. Photograph the odometer on the first and last day, and write a clear purpose for every business trip — "site visit, client and suburb" is far better than "work".

How business use affects finance

Business vehicle finance is for vehicles used mainly in the business. Lenders don't usually ask for your logbook, but they do want to understand how the vehicle will be used. A strong business-use figure supports both your tax position and the finance story. If the vehicle will be mostly personal, business finance probably isn't the right fit. Wondering which structure suits your vehicle? Try the business vehicle finance planner, or read about GST on business vehicles.

When you're ready, tell us about the vehicle. There's no credit check when you first enquire, and one specialist — not a crowd of lenders — calls you to talk it through.