Are you still using the “cents per kilometre” method to claim your car expenses? If you’re a tradie, a rideshare driver, or a small business owner who is constantly on the road, you might be leaving as much as $5,000 in tax deductions on the table every single year.

In this episode of The Lat Chat, we sat down with Lachlan and Ashlin, the innovative duo behind CarSavvy, an all-in-one car management app. They shared insights into why the old ways of tracking vehicle expenses are failing modern Australians and how digitising your records can lead to a massive “tax holiday” in the form of extra savings.

The Death of the Manual Logbook

For decades, the Australian Taxation Office (ATO) has required a 12-week logbook to justify high business-use claims for vehicles. Historically, this meant keeping a tattered paper book in your glovebox and manually scribbling down every trip: where you went, why you went there, and your odometer readings.

Let’s be honest—hardly anyone does this perfectly. Most people end up trying to “recreate” their logbook at tax time by scrolling through old bank statements, toll records, and calendar invites. This retrospective approach is not only incredibly stressful; it’s often inaccurate and won’t stand up under the scrutiny of an ATO audit.

Why “Cents per Kilometre” Often Falls Short

Many taxpayers opt for the cents per kilometre method because it’s “easier.” While it allows you to claim up to 5,000 kilometres at a set rate without a logbook, it’s a blunt instrument. If you drive a heavy vehicle, carry expensive tools, or travel long distances for work, your actual running costs—fuel, insurance, servicing, and depreciation—usually far exceed what this basic method allows you to claim.

The Power of the Logbook Method

Switching to the logbook method allows you to claim the actual business-use percentage of all your car-running costs. This includes:

• Fuel and Oil: Costs are significantly higher when carrying heavy loads.
• Repairs and Servicing: Essential for keeping your work vehicle safe and reliable.
• Registration and Insurance: Fixed costs that quickly add up.
• Depreciation: Reflecting the wear and tear on your vehicle over time.

By tracking your usage for a continuous 12-week period, you establish a percentage that can generally be used for up to five years. If that logbook shows you use your car for work 80% of the time, you get to claim 80% of those total costs.

From Electrician to Tech Innovator: The CarSavvy Story

The motivation behind CarSavvy came from a very relatable place. Lachlan started his career as an apprentice electrician, eventually helping scale a service business from a one-man band to a team of 13.

During his time on the tools, he realised two things:

1. Scaling a service-based business is a grind.
2. Tradies are losing a fortune because they hate paperwork.

Lachlan saw that while tradespeople are incredibly technical and hard-working, the “admin” side of vehicle ownership—tracking services, insurance, and tax records—often falls through the cracks. This led him to “hang up the boots” and move into the world of software (or “SaaS”) to build a product that could help drivers globally.

How Automation is Changing the Game

If the thought of manual tracking makes you cringe, you aren’t alone. Ashlin, who brings a background in marketing and psychology to the team, noted that people are increasingly looking for “digital fingerprints” for their assets rather than physical folders.

CarSavvy utilises several high-tech features to remove the “human error” from car management:

• Automatic Drive Detection: The app senses when you are in your vehicle and automatically logs the start location, time, and route.
• AI Quick Capture: Instead of manually entering data from a crumpled receipt, you simply take a photo. The AI understands the document—it doesn’t just read the text, it categorises the expense correctly for your accountant.
• Fuel Finder: A free feature that helps you find the cheapest fuel nearby without the annoying ads found in other apps.

Turning a Hobby into a Business

Interestingly, Ashlin’s journey into the startup world was partly inspired by her own “side hustle.” After a leg injury left her sidelined, she took up crochet and quickly realised the business potential of handmade, premium goods.

While a handmade dress might take 30 hours of labour and sell for a premium, it taught her a valuable lesson about business: value your time. Automating your tax records is the ultimate way to “buy back” your time so you can focus on what actually makes you money—whether that’s on a construction site, in a consultation room, or behind a steering wheel.

State-Specific Considerations

While the ATO handles federal income tax and GST, it is important to remember that certain vehicle-related costs vary across Australia. If you are purchasing a new vehicle for your business, Stamp Duty rates differ between states. Similarly, if your business grows to the point where you have a large fleet, Payroll Tax and Land Tax (for your workshop or office) are governed by state-specific legislation and will vary depending on where you operate.

Frequently Asked Questions

What is the 12-week logbook rule?

To use the logbook method, you must track all journeys for a continuous 12-week period to represent your typical usage. This logbook is then valid for up to five years, provided your circumstances don’t significantly change.

Can I use a digital app for my ATO logbook?

Yes. The ATO accepts digital records as long as they capture the required information, such as date, purpose, and kilometres travelled. Using an app like CarSavvy ensures your records are stored centrally and are easily accessible during tax time.

What happens if I lose my paper receipts?

Without a record of the expense, the ATO may disallow the deduction. Digitising your receipts via AI capture as soon as you receive them ensures you have a permanent, backed-up record that your accountant can access instantly.

Is the “cents per km” method better for small distances?

If you drive fewer than 5,000 work kilometres a year and have a low-maintenance vehicle, the cents per km method is simpler. However, if your actual expenses (fuel, insurance, repairs) are high, the logbook method usually results in a larger refund.

Take Control of Your Vehicle Expenses

Whether you’re managing one ute or a whole fleet, the goal of car ownership should be to remove the chaos and maximise your returns. Don’t let thousands of dollars in legitimate tax deductions slip through your fingers because of outdated paperwork.

Are you ready to stop “dodging up your papers” and start using a system that works? At Latitude Accountants, we specialise in helping small business owners navigate the complexities of Australian tax law to ensure you keep more of what you earn.

Contact the expert team at Latitude Accountants today for strategic accounting and business advice tailored to your specific situation. Let’s get your business moving in the right direction.

• Phone: 1300706597
• Email: info@latitudeaccountants.com.au
• Book online via our website.
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Disclaimer

The information provided in this blog post is general in nature and does not constitute personal financial or tax advice. Taxation laws are subject to change, and individual circumstances vary. Readers should seek professional advice from a qualified accountant or financial advisor regarding their specific circumstances before making any decisions.