What makes an FBT logbook fail: the ATO's own list

An FBT logbook fails when it cannot prove business use. The ATO names three common errors: entries that only say "business", business and private trips co-mingled in one entry, and records that do not match the actual travel. Without valid logbook and odometer records you must use the statutory formula method instead.

What actually happens when a logbook fails?

Most people picture a penalty notice. That is not the first thing that happens.

The ATO’s position on the operating cost method is one sentence long: if you don’t have logbook and odometer records, you must use the statutory formula method. Lose the logbook and you lose the method. The statutory formula applies a flat 20% to the car’s base value and ignores how much of the driving was actually work.

The ATO’s own small business guide puts the two methods side by side. The scenarios below are its published illustrations — not the same vehicle costed twice — but the shape of the gap is the point.

FBT is calculated on the grossed-up taxable value. Those last two figures apply the Type 1 gross-up rate of 2.0802, which is the rate where you can claim GST credits on the benefit, and the 47% FBT rate that holds for every FBT year ending 31 March 2023 through to 31 March 2027.

That is roughly $3,060 of FBT on one vehicle, in one year, because the records did not hold up. Four utes and it stops being an admin problem.

What does the ATO say it looks for?

The ATO publishes what attracts its attention for FBT, and motor vehicles get their own section. The wording is blunt: it sees a significant level of non-compliance involving motor vehicles, and it names three behaviours — classifying vehicles incorrectly, treating private use as business use, and not keeping a valid logbook.

On logbooks specifically, it lists the errors it actually sees:

• Insufficient information about the purpose of the journey — simply saying it was a “business” journey isn’t enough.
• Co-mingled business and private trips listed as one entry.
• Discrepancies and inconsistencies — the logbook entries should match the actual travel.

That list was last updated on 26 May 2026. It is the closest thing to a marking guide you will get, and it is worth reading as one.

Why isn’t “business” a good enough entry?

Because the entry has to let someone else classify the trip without ringing you up to ask. The employer guide is explicit that an entry stating “business” or “miscellaneous business” will not be enough — the description has to be sufficient for the journey to be classified as a business journey on its own.

The ATO’s own example of an acceptable entry is a salesperson who called on ten customers around the Bathurst–Orange area in New South Wales: odometer readings at the start and end of the consecutive journeys, and the purpose recorded as “10 customer calls, Bathurst–Orange area”. Several business trips run back-to-back on one day can be a single entry. A business leg and a private leg cannot.

Entries also have to be in English, and made at the end of a trip or as soon as reasonably practicable afterwards. Rebuilding twelve weeks of driving months later from job invoices is not what that rule describes.

Which trips count as private?

This is where most logbooks quietly fail. The ATO offers a one-line test: if the employee had paid for the costs of using the car themselves, could they have claimed an income tax deduction?

Applied to a work ute, that rules out more than people expect.

• Travel between home and work is private use, as a general rule.
• Ducking out to grab lunch is private.
• The school pickup on the way home is private.
• A car garaged at an employee’s home is treated as available for their private use — whether or not they have permission to use it privately.

That last one catches small operators hardest, because the ute lives at the apprentice’s place and nobody thinks of it as a benefit. Availability is the test, not use. Some commercial vehicles are exempt from FBT altogether where private use stays limited, which is a separate question worth settling first — when is a work ute actually exempt from FBT?

Does your twelve weeks still represent the year?

A logbook covers a continuous twelve-week period, and the ATO’s requirement is that the period chosen be representative of that car’s business use. Twelve weeks kept across your busiest quarter and then applied to a quiet year is a discrepancy waiting to be found.

A logbook lasts up to five years, assuming there is no major change in the pattern of use. The small business guide is more specific about what counts: if your circumstances change, such as a change in the type of work your business undertakes, you may need a new logbook. A sparky who moves from new builds to service calls has changed the pattern of use, whatever the five-year clock says.

You also need one logbook per car. There is no fleet-average shortcut for a small operator — the optional simplified record-keeping approach in PCG 2016/10 starts at a fleet of 20 or more cars.

What about the odometer records everyone forgets?

Logbook records and odometer records are two different obligations, and the odometer half is the one small fleets skip.

For every car valued under the operating cost method, record the odometer at the start of the FBT year on 1 April, and again at the end of the FBT year on 31 March. Note those dates. Generic logbook advice often says 30 June, because it is written for income tax car claims — the FBT year is not the income tax year, and the wrong date leaves you with no closing reading at all.

If you replace a car mid-year and carry the business percentage across to the new one, the odometer records have to show readings for both the old and the new car on the replacement date.

How do you check your own logbook before the ATO does?

Pull one vehicle’s twelve weeks and read it the way an auditor would.

• Does every entry carry a start date, an end date, opening and closing odometer readings, kilometres travelled and a purpose?
• Would a stranger be able to tell from the purpose alone that the trip was business?
• Do the odometer readings run continuously — does each trip start where the last one finished?
• Do the twelve weeks match the jobs you actually invoiced over that period?
• Is there a 1 April reading and a 31 March reading for that car?
• Is there a separate logbook for every car, with its make, model and rego recorded?

If the answer to any of those is no, the fix is a fresh twelve weeks starting now, not a tidied-up version of the old one.

Where software helps, and where it doesn’t

Recording is the part that breaks, because it has to happen at the time. Axlerun’s FBT logbook records trips automatically by GPS with the odometer readings attached, and that recording is free on the Drive plan for your first three vehicles — the paid step is the export to Excel or PDF, on Cruise. Auto-classify rules handle the trips you make every week, so the purpose field is filled in on the day rather than reconstructed at the end of the quarter.

What no app will do is decide for you which trips were private. That judgement is yours, and it is exactly the thing the ATO says it looks at. A paper book in the glovebox that actually gets filled in is a valid record — the ATO accepts an electronic or a pre-printed logbook, and neither one is more compliant than the other.

What if you already know a logbook won’t hold up?

If a return has gone in relying on records you no longer trust, the ATO’s guidance is that you can amend the return or make a voluntary disclosure. Keep FBT records for five years from the date you lodge the return — or five years from 21 May, the lodgment due date, if you were not required to lodge one.

Axlerun is software, not a tax agent. What your business should do about a logbook that does not stand up is a conversation for your accountant, and it is a much cheaper conversation to have now than in the week the return is due.