ATO Company Car & Logbook Rules 2026: What Changed & How to Claim
The ATO has tightened electronic logbook rules and updated FBT rates for 2025-26. Here's exactly what you need to know to claim your company car correctly.
By ECTD Editorial · Published 2026-07-20 · Updated 2026-07-20
If you have a company car or use your own car for work and claim it through your business, the ATO has made several changes for 2025-26 that affect how you keep records, calculate Fringe Benefits Tax (FBT), and claim deductions. The electronic logbook is now fully accepted, but the rules around what counts as a valid logbook entry have been tightened. Here's the plain-English guide to getting it right.
The 12-Week Logbook Rule Still Stands (But It Must Be Electronic Now)
For the 2025-26 financial year, the ATO still requires a continuous 12-week logbook period to establish your business-use percentage. However, from 1 July 2025, the ATO has made it clear that paper logbooks are no longer acceptable for new claims. You must use an electronic logbook app or a spreadsheet that automatically timestamps entries.
This doesn't mean you need a fancy GPS tracker. A simple spreadsheet with auto-date stamps or a free app like MileIQ, Everlance, or the ATO's own myDeductions tool will satisfy the requirements. The key is that entries cannot be backdated or edited after the trip. If you get audited, the ATO will check the metadata to confirm the entries were made on the day of travel.
ATO Audit Risk: Backdated Logbooks: In 2025, the ATO flagged a 40% increase in audits of car-related claims. One of the biggest red flags is a logbook that looks too clean — all entries in the same handwriting, no odometer photos, or dates that don't match fuel receipts. If you're audited, you'll need to show your logbook entries were recorded in real time.
FBT Changes for 2025-26: The Statutory Method Rates Are Frozen
For FBT purposes, the statutory formula method remains the most common way to calculate the taxable value of a company car. For 2025-26, the ATO has frozen the statutory rates at the same levels as last year: 20% for cars that travel more than 15,000 km per year, and higher rates (up to 47%) for lower kilometre usage. This is a win for high-kilometre drivers, as the rate stays low.
However, the operating cost method (where you track actual costs) now requires you to keep a logbook for at least 12 continuous weeks every 5 years, not just once. If your logbook is older than 5 years, you must do a new one this year even if your driving patterns haven't changed.
- Statutory method: 20% for cars over 15,000 km/year, 26% for 15,000 km or less
- Operating cost method: logbook valid for 5 years only, then must be redone
- Electric vehicles: FBT exemption continues for EVs below the luxury car threshold ($89,332 for 2025-26)
- Plug-in hybrid EVs: FBT exemption ends 1 April 2025, so they're now fully taxable
How to Calculate Your Business-Use Percentage Correctly
Your business-use percentage is the number of business kilometres divided by total kilometres during the 12-week logbook period. But the ATO expects that percentage to be reasonably consistent with your actual annual usage. If your logbook says 80% business use but your fuel receipts show you drove 30,000 km total and only 5,000 km were for business, that's a red flag.
For 2025-26, the ATO has introduced a new 'reasonableness test' that compares your logbook percentage against your odometer readings and fuel receipts for the full year. If the numbers don't line up, expect a phone call from the ATO.
Pro Tip: Take Odometer Photos: At the start and end of your 12-week logbook period, take a clear photo of your odometer with a timestamp (a newspaper in the photo also helps). This creates a verifiable record. Also keep all fuel receipts — the ATO cross-checks them against your logbook entries.
Private Use vs Work Use: What Counts as Business?
The ATO defines business use as travel directly related to earning your income. That includes: driving between job sites, visiting clients, going to the bank or post office for business, and attending work-related meetings. It does NOT include: driving from home to your regular workplace (that's private), stopping at the shops on the way home, or taking a detour for personal errands.
One common mistake is claiming travel between home and a regular place of work as business. Even if you work from home some days, the trip to the office is still private. Only if you have no fixed place of work (e.g., you're a tradie who works at different sites each day) does home-to-first-job-site count as business.
Electric and Hybrid Company Cars: Special Rules for 2025-26
If you have a fully electric company car, you're still eligible for the FBT exemption (zero taxable value) as long as the car's first retail price is below the luxury car tax threshold for fuel-efficient vehicles ($89,332 for 2025-26). This means no FBT, no reportable fringe benefits amount, and no GST on the purchase price.
But for plug-in hybrid electric vehicles (PHEVs), the FBT exemption ended on 31 March 2025. From 1 April 2025, PHEVs are treated like regular petrol cars for FBT purposes. If you ordered a PHEV before 1 April 2025 but it wasn't delivered until after, it still qualifies for the exemption if the contract was signed before that date.
Record-Keeping Requirements: What the ATO Expects
For 2025-26, the ATO requires you to keep the following records for your company car: a valid electronic logbook covering at least 12 continuous weeks, odometer readings at the start and end of the logbook period and at the end of the financial year, all fuel and servicing receipts, and if using the operating cost method, records of all other car expenses (insurance, registration, lease payments).
You don't need to submit these with your tax return, but you must keep them for 5 years from the date of lodgement. If you're audited, you'll need to produce them within 28 days.
- Electronic logbook with automatic timestamps (no paper allowed)
- Odometer photos at start, end of logbook, and year-end
- Fuel receipts for the full year (not just the logbook period)
- Servicing and registration receipts
- If using operating cost method: all expense receipts
What Happens If You Get It Wrong?
The ATO's data-matching program for vehicle registration and fuel purchases makes it easier than ever to spot discrepancies. If your claimed business-use percentage doesn't match your fuel purchases or registration details, the ATO will issue a letter asking for an explanation. If you can't provide a valid electronic logbook, they may disallow the entire deduction and impose penalties of up to 75% of the tax shortfall.
For FBT, getting it wrong can be even more expensive. If you under-report FBT, the ATO can issue penalties of up to 100% of the tax owed, plus interest. That's why it's worth spending the time now to set up a proper electronic logbook system.
Still Confused? Get Professional Help: Company car and FBT rules are one of the most common areas for ATO audits. If you're unsure whether your logbook is compliant or which method to use, a registered tax agent can help. The cost of professional advice is tax-deductible, and it's far cheaper than an audit penalty.
General information only — not personal financial, tax, legal or medical advice. Consider your own situation and consult a licensed professional before acting. Figures are current as at the date shown above.