Novated Lease (Business Use)

Business use and the logbook method

Where a vehicle is used partly for work-related or business purposes, it may be possible to apportion costs using the logbook method. Under this approach, the percentage of business use is established by maintaining a logbook for a continuous 12-week period, which then applies to FBT calculations for up to five years (unless circumstances change materially).

The ATO sets out specific requirements for how a logbook must be maintained. It must record the odometer readings at the start and end of each business journey, the date, destination, purpose of the trip and kilometres travelled. Incomplete or retrospective logbooks are not accepted.

How it affects FBT calculations

Where a business use percentage is established via logbook, the taxable value of the fringe benefit may be reduced, as only the private use component is subject to FBT. This can change the economics of a novated lease arrangement, particularly for employees with genuinely high business use kilometres.

What evidence is required

In addition to the 12-week logbook, you must retain odometer records for the start and end of each FBT year. The logbook must be current, signed and available for audit if required. You should not destroy logbooks for at least five years, or longer if your logbook period is still in effect.

Common mistakes and how to avoid them

• Failing to start the logbook properly or not maintaining it for the full 12-week period
• Claiming a high business use percentage without adequate diary entries to support it
• Not refreshing the logbook when travel patterns change materially
• Confusing commuting (home to work) with business travel - commuting is not business travel under the ATO's rules
• Not retaining records after the logbook period ends