The Logic of Logbooks
There’s been a lot of furore about the changes to the Fringe Benefit Tax rules – what’s it going to do to the car sales industry, what it’s going to mean for companies who want to retain their employees, what it’s going to mean for the economy in general and so forth. My fellow-blogger Dave has posted quite a few very informative articles on the topic ().
However, let’s have a wee think about the small implications. Not the big ones that discuss whether or not the changes in the rules will affect what’s left of the Australian car manufacturing industry but the ones that affect what you and I will have to do if our company is going to provide us with a novated lease under the new system.
One of the key changes is that when it comes to tax time, you can’t just say that 20% of the kilometres driven were personal and the rest were for business. We’ve all got to use log books. A lot of people were already on the logbook method for cars dished out as part of a salary package. If you’re one of these people, you’re probably not going to notice a lot of difference, if any.
The idea behind the logbooks is that some people – OK, make that a lot of people – were using their cars for way more than 20% of the kilometres driven for personal business. This meant that they were paying less fringe benefit tax than they really ought to. The whole idea behind t
he changes was meant to close this loophole so people who weren’t on the logbook system paid a fair amount of tax.
The good news is that keeping a logbook isn’t all that hard. All you have to do is to write in the date of the trip, the purpose of the trip (which you can shorten down to “business” and “personal” rather than trying to fit in “taking Amy to Sarah’s birthday party and picking up a roll of wallpaper from the hardware store on the way back”) and the odometer reading at the end of the trip. Then you have to work out how many clicks the trip took by subtracting the odometer reading at the end of the last trip from the end of the current trip – which requires a good head for mental arithmetic or a handy cellphone with a calculator app. Most of us, however, can rely on the trip computer that most modern cars come with. This sounds fiddly, but it’s not that hard once you’re into the swing of things.
Naturally, people have already come up with smartphone apps for vehicle logbooks. Sole traders and the self-employed already have to keep logbooks, for example, so there’s been plenty of time to develop them. I guess it’s only a matter of time until someone comes up with an app that logs your trips and sends the info directly to the office bean-counters… or Big Brother.
The big thing to know is the difference between what’s considered a work trip and what is considered a personal trip. The real stinger here is that the commute to and from work is not considered to be a work or business trip – it’s a personal trip. If you took the bus to work instead of chugging along in your little Peugeot 206 hatchback or whatever you drive, you’d have to fork out for the bus fare and your employers wouldn’t have to pay your bus fare (in most cases, and we won’t go into the subsidies that some eco-minded businesses have tried here). However, if you have to visit a client, make a delivery, pick up some supplies for the office or something like that, that’s a business trip.
Logbooks aren’t all that hard, so don’t get into a panic if you have to keep one. You can still get a car as part of a salary package deal, and you can still claim some of the mileage back against tax.
Level 2, 9 Help Street