I’ve spoken on several occasions about the benefits of using a log book to track your vehicle’s expenses and usage. By maintaining a record of capital costs, upkeep and other outlays you can claim your vehicle as a tax deduction.

Many of you have been concerned about the change and what it means for you – below are eight answers to your most common questions.

1.    What exactly are these changes?

The proposed changes will replace the current statutory method of calculating Fringe Benefits Tax (FBT) for novated leases on vehicles, (i.e. either salary packaged, salary sacrificed or otherwise provided by an employer), with the existing log book method.

Although these methods currently exist as two alternatives, from the 1^st April 2014 for new lease contracts or pre- existing leases that are adjusted, the log book method is the recommended solution. 

The ATO is engaging in stricter actions against people that willingly or by mistake manipulate their work claims for their own benefits. With the use of a log book, the possibility of fraud is reduced. The log book is a perfect method to provide and keep track of your trips and expenses.

2.    What does that mean in laymen terms?

Under the status quo, it was possible for people using a company vehicle to claim their car was driven for a minimum of 20% of personal kilometres – whether that was true or not. They could then pay only 20% tax on a vehicle which could have been 99% personal-use.

Under the new scheme, employees with company vehicles will have to start paying tax on the actual proportion of the vehicle, (capital expenses, incidentals and upkeep), which are personal use.

3.    Who are these changes going to affect?

This is a reform that’s going to have a flow-on effect from the Australian car manufacturing industry, to the car leasing industry, as well as large corporations that include company cars as part of their benefits as standard.

It will have a smaller effect on small or medium businesses that provide vehicles for employees. This change is set to affect about 330,000 Australians driving company vehicles. Of those, 80% are in the public sector.

While this might sound like a lot of people, the vast majority of Australians will be unaffected.

4.    When? 

Changes will apply to all new contracts into after the date of 16^th July 2013. The changes will come into full effect from 1^st April 2014.

5.    What does this mean for me as a driver and taxpayer?

If you’re one of the drivers affected by this change, don’t panic – unless you are claiming more than you are entitled to, you are probably not going to feel any appreciable financial difference at all.

The requirement is to keep a log book for 12 weeks every 5 years. 12 weeks of regular bookkeeping could save you a lot more than you think as you will be able to pay a little more attention to your car usage. As such you might realise that cost savings and fuel economies are feasible provided you service your vehicle or upgrade it.

With an automated app it is unlikely this record keeping will become a noticeable drain in terms of time or paperwork. Treasurer Chris Bowen says:

“Many of these apps will let the the smartphone do most of the work for you and let you send the results directly to your employer or tax agent - no calculations required.”

6.    What does this mean for an employer and provider of company vehicles?

For large corporations – (seen as the target of the changes to the FBT) – it might not be as attractive to liberally throw luxury cars into executive salary packages. However, the bottom line is not going to be greatly affected. Bringing enterprise grade logbook solutions should help keep the FBT liability from going through the roof.

For small and medium enterprises, there is still a raft of tax deductions available for those who genuinely can claim vehicles for business purposes.

Independent workers - The ATO will be targeting tradies, sales and marketing managers who incorrectly claim high work related expenses. Make sure you keep your expense records in order.

7.    How can I use this to my advantage?

If you are not already using an automated car reporting system, the new changes of the FBT should be the reason that prods you into action. That is why www.Your Car Log.com was designed, a simple tool to take away the pain of record keeping and handle the FBT requirements on your behalf.

For those of us who get in early, this change is a great opportunity to save ourselves some bookkeeping stress and get ahead of the curve.

8.    So what do you recommend?

As you need to use the log book method, make sure you pick up all your deductible trips to maximise your work-related percentage and using an application like Your Car Log is a great way to beat the taxman.

Julian Khursigara is the COO of www.YourCarLog.com and has extensive knowledge in taxation, and provides up to date tips on topics associated to work related car expenses.