I wanted to use Time Machine on my exFAT hard drive, but turns out that these volumes aren't supported from Time Machine! There is a very simple way to use Time Machines on unsupported hard drives, as long as you follow these instructions carefully you shouldn't have any issues at all.
First, connect the unsupported volume (in this case, an exFAT external hard drive.) When it mounts, open the Terminal and type these commands, substituting 'My External HDD Name' for the name of the unsupported volume.
cd /Volumes
cd 'My External HDD Name'
Next, type this code, substituting for your needs:
hdiutil create -size 320g -type SPARSEBUNDLE -fs "HFS+J" MacBook-Backup.sparsebundle
open MacBook-Backup.sparsebundle
Here, a 320GB sparse bundle named 'MacBook-Backup' is being made and mounted. You can change these values as you see fit. From herein, I'll refer to the sparse bundle name as 'MacBook-Backup'.
After you've run these commands, a new volume named untitled will appear on your Desktop. This will become your Time Machine backup volume. If you want, rename it to something else (I called mine MacBook Pro Backup) and run the command:
diskutil list
You should see a list appear of all connected volumes. Find your new volume's name and read along until you find the disk identifier. In this case, my identifier is disk2s2, but yours may be different.
Finally, enter the commands below (entering your password if prompted). Replace disk2s2 with your identifier, and 'MacBook Pro Backup' with the name of your new Time Machine volume.
sudo diskutil enableOwnership /dev/disk2s2
sudo tmutil setdestination '/Volumes/MacBook Pro Backup'
Now, open the Time Machine preference pane in System Preferences, and turn Time Machine on. That's it - you've set up Time Machine with an unsupported volume!
[crarko adds: I'd suggest having a known good backup handy before trying any procedure like this, just in case. If Time Machine recognizes the volume you should be good. The hint resembles what has been done using network volumes. If you do try this out please post your experience to the comments.]
Mac OS X Hints
http://hints.macworld.com/article.php?story=20140415132734925