The quick answer
Your car is usually your biggest claim, and the one that depends most on your records.
What you need to keep depends on how your claim is worked out.
Even the simplest method isn’t record-free. The ATO can ask how you arrived at your business kilometres.
The harder part: knowing which claim your records can actually support.
The rule is short. Living with it isn’t.
You can only claim the business part of your car costs, and you need records that show what that part is.
The ATO gives sole traders more than one way to work out a car claim. One is simple, but it stops at 5,000 business kilometres a year for each car. Another is based on a logbook kept for at least 12 weeks in a row. Each one asks for different records.
“we may ask you to show how you worked out your business kilometres”Australian Taxation Office, Cents per kilometre method
So even the method drivers call “the easy one” is not paperwork-free. And the method that gives a bigger claim asks for a lot more.
What to keep, in plain English
Whatever method ends up being used, these are the records the ATO expects a business to hold for a vehicle:
The kilometres you travel for business, and for private use
Receipts for fuel, oil, repairs, servicing and insurance
Loan or lease documents
Tax invoices
Registration papers
How your claim was worked out
Keep them for five years. A phone photo of a receipt taken on the day is worth more than a shoebox sorted in a panic.
Two drivers, same kilometres, different claims
Take two delivery drivers who cover the same distance in a year, in similar cars. One ends up with a much smaller claim than the other, or has part of the claim taken back later.
The difference isn’t the driving. It comes down to how each claim was worked out, what records each driver kept, and how much of the car’s use was private.
Six questions that decide your claim
QUESTION 1
Which method do your records support?
The one that gives the bigger claim isn’t always one you can use.
QUESTION 2
What counts as a business kilometre?
To the first pick-up, between jobs, back home. Not every trip counts the way drivers assume.
QUESTION 3
Is your logbook still good?
A logbook doesn’t last forever, and a change in how you work can make an old one unreliable.
QUESTION 4
Whose name is the car in?
Who owns or leases the car changes how it can be claimed.
QUESTION 5
Are you claiming a cost twice?
Some methods already include costs that drivers then add again on top.
QUESTION 6
Do your receipts match your claim?
Cash fuel, a shared card, a missing invoice. Small gaps add up.
There is no single answer to any of these. Each one depends on your own situation. Working them out is what we do every day.
What getting it wrong can cost
A smaller claim than you were entitled to, because your records only supported the simplest method.
A claim reduced or taken back later, because the records weren’t there when the ATO asked. Penalties and interest may be added.
The same gap in your BAS. If you are registered for GST, a car cost you can’t support affects your GST as well as your tax.
Does this sound like you?
I’ve never kept a logbook.
I kept a logbook once, a few years ago.
I use the same car for deliveries and for my family.
I drive well over 5,000 kilometres a year for deliveries.
I pay for fuel in cash, or on a card I share.
The car is in someone else’s name.
I’d rather be delivering than doing paperwork.
If even one of these is you, it’s worth a quick conversation. Sorting it out early is almost always easier than fixing it after the ATO gets in touch.
Common questions
Do I need a logbook if I only deliver part-time?
It depends on how far you drive for work and how your claim is worked out. That’s one of the first things we look at.
I didn’t keep records this year. Is it too late?
Not necessarily. Tell us what you do have, and we’ll tell you what can be supported and what to keep from now on.
How much does it cost?
It depends on your situation, so we give you the fee before any work starts. Asking for a quote costs nothing.
