Managing vehicle records becomes increasingly important as a business adds more cars and more drivers.
If employees use company vehicles for both business and private travel, accurate records may be needed to calculate the business-use percentage of each vehicle and support the employer’s fringe benefits tax obligations.
For employers using the operating cost method to calculate the taxable value of a car fringe benefit, the Australian Taxation Office requires appropriate logbook and odometer records to substantiate business use.
For larger fleets, the ATO also provides a simplified record-keeping approach that may allow qualifying employers with 20 or more cars to calculate an average business-use percentage from a representative portion of their fleet.
This guide explains:
- when fleet vehicle logbooks may be required
- how long an ATO logbook needs to be kept
- what information needs to be recorded
- how business-use percentages are calculated
- what happens after the initial logbook period
- how the rules apply to multiple drivers and vehicles
- the special rules available to qualifying fleets of 20 or more cars
- how electronic fleet logbooks can simplify record keeping
Why do employers need vehicle logbooks?
Providing an employee with a vehicle can have fringe benefits tax implications when the vehicle is available for private use.
FBT is paid by employers on certain benefits provided to employees or their associates and is separate from income tax.
The Australian FBT year runs from 1 April to 31 March.
One example of a fringe benefit is allowing an employee to use an employer-provided car for private purposes.
Employers generally have two methods available for calculating the taxable value of a car fringe benefit:
- the statutory formula method
- the operating cost method
A vehicle logbook becomes particularly important when an employer uses the operating cost method.
Under this method, the taxable value can take the vehicle’s business use into account. The employer therefore needs records that support the estimated percentage of business kilometres travelled during the FBT year.
Without the required records, an employer may not be able to reduce the vehicle’s taxable value based on business use.
How long does an ATO vehicle logbook need to be kept?
A logbook is generally maintained for a continuous period of at least 12 weeks.
The period should be representative of the vehicle’s normal business use.
For example, if a sales vehicle is normally driven extensively throughout the year, choosing a 12-week period when the employee is on extended leave may not provide a reasonable picture of the vehicle’s normal usage.
Similarly, a business experiencing a temporary change in operating conditions should consider whether the selected period accurately represents how the vehicle is ordinarily used.
The 12-week period does not necessarily need to align with the start or end of the FBT year and may overlap different tax years.
What needs to be recorded in an ATO vehicle logbook?
The ATO requires specific information to be recorded for business journeys.
For each business journey, the logbook should record:
- the date the journey began
- the date the journey ended
- the odometer reading at the beginning of the journey
- the odometer reading at the end of the journey
- the number of kilometres travelled
- the purpose of the journey
Entries must be recorded in English and should be made at the end of the journey or as soon as reasonably practical afterwards.
The purpose of the trip also needs to be meaningful.
A description such as:
“Client meeting – Parramatta”
provides significantly more information than simply recording:
“Business”
The ATO specifically notes that general descriptions such as “business” or “miscellaneous business” are not sufficient to properly describe the purpose of a journey.
Do private trips need to be entered into the logbook?
The ATO logbook requirements focus on recording business journeys.
Private journeys do not necessarily need individual logbook entries, although businesses may choose to record them to make trip classification and reconciliation easier.
The total kilometres travelled by the vehicle are still important because the employer needs to determine the proportion of total travel that was for business purposes.
For fleet management purposes, recording both business and private trips can make it easier to:
- identify unclassified journeys
- reconcile total vehicle kilometres
- review employee vehicle use
- calculate business-use percentages
- maintain a clearer audit trail
Odometer records are also required
A logbook is only part of the record-keeping requirement.
Employers using the operating cost method also need appropriate odometer records.
Odometer records establish the total distance travelled by the vehicle and are used together with the business journeys in the logbook to determine the vehicle’s business-use percentage.
The ATO requires odometer records covering the relevant periods, including the period in which the logbook is maintained and the total distance travelled during the applicable FBT year.
For fleet operators, it is good practice to maintain vehicle information such as:
- registration number
- make
- model
- opening odometer reading
- closing odometer reading
- logbook period
- calculated business-use percentage
How is the business-use percentage calculated?
The business-use percentage represents the proportion of the vehicle’s total travel that relates to business use.
In simplified terms:
Business-use percentage = Business kilometres ÷ Total kilometres × 100
For example:
A vehicle travels 15,000 kilometres during the relevant period.
Of those kilometres:
- 12,000 km are estimated to be business travel
- 3,000 km are private travel
The business-use percentage would be:
12,000 ÷ 15,000 × 100 = 80%
However, employers should not simply apply the 12-week logbook percentage automatically without considering the rest of the year.
The ATO requires the employer to make a reasonable estimate of business kilometres for the FBT year, considering:
- the logbook records
- odometer records
- other relevant records
- changes in the pattern of vehicle use during the year
If vehicle usage changes significantly after the logbook period, the employer needs to take that change into account.
What counts as business travel?
Correctly distinguishing between business and private travel is one of the most important parts of maintaining a vehicle logbook.
A typical example of business travel would be an employee driving:
- from their workplace to a client’s premises
- between client locations
- between different work sites
- to perform duties required by their employer
The ATO specifically gives travel from an employee’s workplace to a client’s premises as an example of business use.
Travel between home and a normal workplace, however, is generally considered private travel.
There are exceptions, including some circumstances involving itinerant employment or employees who commence work when called out, so businesses should assess the circumstances rather than assuming every journey involving home is either business or private.
How long is an existing logbook valid?
A valid logbook can generally continue to be used for up to five years, provided there has not been a major change in the pattern of vehicle use.
This means an employer does not ordinarily need to complete another full 12-week logbook every year.
However, odometer records are still important in subsequent years.
Employers also need to consider whether the previous business-use pattern remains representative.
A new logbook may be appropriate where there has been a significant change, such as:
- the vehicle being reassigned to a different employee
- the employee changing roles
- a major change in work location
- a significant change in business versus private travel
- the vehicle being used for substantially different duties
After the five-year period, a new logbook will generally be required.
What if multiple employees drive the same vehicle?
Fleet vehicles are often shared between multiple employees.
For example, a pool vehicle may be used by several technicians, sales staff or managers throughout the same week.
The logbook requirements relate to the vehicle and its journeys, rather than requiring a completely separate vehicle logbook for every employee.
The ATO guidance states that one logbook is required per car.
For fleet managers, however, recording the driver associated with each journey can still be valuable.
It can help identify:
- who was responsible for a trip
- whether the journey was business or private
- missing trip purposes
- unexplained vehicle use
- which employee needs to provide additional information
This becomes particularly useful when dozens of drivers and vehicles are being managed centrally.
Do all vehicles in a fleet need a logbook?
For ordinary FBT record keeping under the operating cost method, each car for which a business-use percentage is being established generally needs appropriate records.
There is, however, a special simplified approach available to certain larger fleets.
The ATO’s Practical Compliance Guideline PCG 2016/10 provides qualifying employers with a simplified way of calculating the business-use percentage for fleet cars.
This is where the commonly referenced 20-car fleet threshold becomes important.
ATO simplified logbook rules for fleets of 20 or more cars
Employers with sufficiently large fleets may not need to rely on a separate individual business-use percentage for every vehicle.
Under PCG 2016/10, a qualifying employer can calculate an average business-use percentage based on valid logbooks from a representative portion of its fleet.
The guideline applies where all of the relevant conditions are satisfied.
These include:
- the employer has a fleet of 20 or more cars
- the vehicles are tool-of-trade cars
- employees are required to maintain logbooks during the logbook year
- valid logbooks are held for at least 75% of the cars
- the make and model of the cars are chosen by the employer rather than the employee
- each car was below the applicable luxury car tax threshold when acquired
- the vehicles are not provided as part of an employee’s remuneration package
- employees cannot choose additional remuneration instead of using the cars
It is important to note that 20 vehicles is not a general ATO definition of a fleet.
A business can operate a fleet containing fewer than 20 vehicles.
The 20-car threshold relates specifically to eligibility for this simplified FBT record-keeping approach.
What is a tool-of-trade car?
For the purposes of the simplified fleet approach, the ATO describes a tool-of-trade car as one provided to an employee so they can perform duties involving extensive business use of the car.
This means the simplified approach is not automatically available simply because an organisation owns 20 or more cars.
The nature of the vehicles, how they are provided and how they are used all matter.
The 75% fleet logbook rule
One of the most useful parts of the simplified fleet approach is the ability to establish an average business-use percentage without needing a valid logbook for every car.
The employer must hold valid logbooks for at least 75% of the cars in the qualifying fleet during the logbook year.
For example:
A business operates 40 qualifying fleet cars.
To satisfy the 75% requirement, it would need valid logbooks for at least:
40 × 75% = 30 cars
If those 30 or more valid logbooks satisfy the ATO requirements, the employer can calculate an average business-use percentage from them.
Example of the simplified fleet approach
Consider a business operating 50 qualifying tool-of-trade cars.
Employees are required to maintain logbooks and the employer obtains valid logbooks for 40 cars.
This means valid logbooks have been obtained for:
40 ÷ 50 × 100 = 80% of the fleet
Because 80% exceeds the required 75%, the employer satisfies the logbook coverage requirement.
If the valid logbooks result in an average business-use percentage of 85%, the business may be able to apply that average percentage to the qualifying fleet under the simplified approach, provided all of the other conditions are satisfied.
The ATO uses a similar 50-car example in PCG 2016/10.
How long can the fleet average be used?
Where the simplified fleet approach applies, the average business-use percentage can generally be used for the logbook year and the following four years.
In other words, the approach can cover a five-year period.
It may also continue to apply to replacement and newly added cars during that period.
However:
- the fleet must continue to contain at least 20 cars
- the other qualifying conditions must continue to be satisfied
- there must not be a material and substantial change in circumstances
For example, the ATO notes that relocating a depot in a way that substantially changes the fleet’s business-use percentage could constitute a significant change.
What happens if the fleet drops below 20 cars?
The simplified approach under PCG 2016/10 requires the fleet to remain at 20 cars or more.
If the fleet falls below that threshold, the business should reassess whether it can continue relying on the simplified method.
This does not mean the business stops being a fleet.
It means the special simplified record-keeping concession may no longer be available.
Standard FBT and logbook requirements may still apply to the individual vehicles.
Can businesses use electronic vehicle logbooks?
ATO records do not have to exist only on paper.
The ATO’s general FBT record-keeping guidance allows records to be maintained electronically, provided they remain accessible and can be converted into written English.
Electronic records are subject to the same underlying record-keeping requirements as paper records.
For fleet operators, an electronic system can reduce the administrative burden associated with collecting records from multiple drivers.
Instead of relying on employees to maintain separate paper books, an electronic fleet logbook can help centralise:
- trip dates
- start and stop locations
- distances travelled
- vehicle information
- trip purposes
- business or private classifications
- driver information
- odometer records
The important point is not whether the records are stored on paper or electronically.
The underlying information still needs to satisfy the relevant ATO requirements.
How long should employers keep FBT vehicle records?
Employers generally need to retain their FBT records for five years.
Relevant records can include:
- vehicle logbooks
- odometer records
- fleet management records
- calculations
- declarations
- invoices
- receipts
- supporting records used to calculate the taxable value of fringe benefits
Electronic records should remain accessible throughout the required retention period.
Common fleet logbook mistakes
Fleet environments can make record keeping more complicated because responsibility is distributed across many employees.
Some common problems include:
Missing trip purposes
Recording kilometres without explaining why the journey was undertaken can make it difficult to establish whether a trip was for business.
Generic descriptions
Descriptions such as “work” or “business” may not provide enough information about the purpose of a journey.
Incomplete logbook periods
The required logbook period generally needs to cover a representative continuous 12-week period.
Missing odometer records
Trip records alone are not sufficient when total vehicle kilometres are needed to establish the business-use percentage.
Unrepresentative logbooks
A logbook completed during an unusual period may not accurately represent the vehicle’s normal pattern of use.
Assuming home-to-work travel is always business travel
Ordinary commuting between an employee’s home and their normal workplace is generally private travel, although exceptions can apply.
Continuing to use an old percentage after vehicle use changes
An existing logbook may remain useful for several years, but businesses still need to consider significant changes in the way the vehicle is used.
Assuming the 20-car rule applies automatically
Having 20 vehicles does not by itself qualify an employer for the simplified fleet approach. All of the requirements in PCG 2016/10 need to be considered.
A practical fleet logbook process
Businesses managing multiple vehicles can make record keeping easier by establishing a consistent process.
A typical process could be:
- Assign each vehicle to the fleet management system.
- Record the vehicle’s registration, make, model and odometer details.
- Identify which vehicles require a logbook.
- Establish a representative 12-week logbook period.
- Require drivers to record or classify their journeys.
- Capture the purpose of each business trip.
- Review missing or incomplete trip information regularly.
- Reconcile vehicle kilometres against odometer records.
- Calculate the business-use percentage.
- Retain the supporting records with the business’s FBT records.
- Review vehicle usage each year for significant changes.
- Start a new logbook when required.
For a large fleet, checking records throughout the logbook period is generally much easier than discovering missing trips or incomplete purposes at the end of the FBT year.
How Travel Logs can help with fleet vehicle records
Maintaining vehicle logbooks manually becomes more difficult as the number of vehicles and drivers increases.
Travel Logs can help businesses centralise vehicle and trip records while allowing drivers to continue recording their travel through the app.
Automatic trip tracking can reduce the need for employees to manually remember every journey, while trip classifications and purposes can be added to help distinguish business and private travel.
For businesses using Travel Logs Fleets, vehicle-related records can also be submitted to the fleet for central review, helping fleet managers identify missing information before records are needed for reporting or tax purposes.
An electronic workflow can be particularly useful when businesses need to manage:
- multiple vehicles
- multiple drivers
- shared fleet vehicles
- business and private trip classifications
- trip purposes
- vehicle kilometres
- historical trip records
- fleet-wide reporting
Travel Logs does not determine a business’s FBT liability or replace professional tax advice, but accurate and accessible vehicle records can make it easier for employers and their advisers to perform the required calculations.
Frequently asked questions
Does every business fleet need 20 vehicles?
No.
There is no general ATO rule stating that a vehicle fleet must contain 20 vehicles.
The 20-car threshold applies specifically to the simplified fleet record-keeping approach in PCG 2016/10.
Businesses with smaller fleets may still have FBT and vehicle logbook obligations.
How many weeks does an ATO fleet logbook need to run?
A standard logbook period is generally a continuous 12-week period that is representative of the vehicle’s normal usage.
Does every trip need to be recorded?
Business journeys used to establish the business-use percentage need appropriate logbook records.
Private trips do not necessarily need to be individually recorded in the logbook, although recording them can make fleet reconciliation easier.
How long does an ATO vehicle logbook last?
A valid logbook can generally be relied upon for up to five years, assuming there has not been a major change in the pattern of vehicle use.
Do I still need odometer readings after the 12-week logbook is complete?
Yes.
Odometer records are important when calculating total kilometres and estimating business use for the relevant FBT year.
Can an electronic logbook be used?
Electronic FBT records can be maintained provided they satisfy the applicable record-keeping requirements and remain accessible.
Do I need a separate logbook for every driver?
The ATO’s guidance states that one logbook is required per car rather than one logbook per employee.
Recording the driver associated with each journey can nevertheless be useful for fleet administration.
Do fleets with 20 or more cars only need logbooks for 75% of their vehicles?
Not automatically.
The 75% rule forms part of the ATO’s simplified fleet approach and only applies where all of the other requirements in PCG 2016/10 are satisfied.
Keep fleet vehicle records organised
Fleet vehicle logbooks are not simply a record of kilometres travelled.
For employers using the operating cost method, they can form an important part of establishing the business-use percentage of company cars and supporting FBT calculations.
For smaller fleets, this generally means maintaining appropriate records for the relevant vehicles.
For qualifying employers with 20 or more tool-of-trade cars, the ATO’s simplified approach may significantly reduce the administrative burden by allowing an average business-use percentage to be calculated from valid logbooks covering at least 75% of the fleet.
Whichever approach applies, the underlying principle is the same:
Accurate trip records, meaningful business purposes and reliable odometer information make vehicle use easier to substantiate.
Businesses should review their circumstances with an accountant, registered tax agent or the ATO where they are unsure how the FBT rules apply to their fleet.
This article provides general information only and does not constitute tax, accounting or legal advice.