Do You Use a Car for Your Business?
If you use the family car for your work as, say an electrician, you may be paying more tax at the end of the financial year than you would have to if you bought a car specifically for the purposes of operating your business. Rather than claim an annual tax deduction for depreciation on the vehicle over its life, you can offset the depreciation in full as a deduction in the next tax return you lodge.
You can deduct the full depreciation of the vehicle from your tax bill during the same financial year, so long as the vehicle you purchase is below $30,000 and is used or ready for use in the same financial year you purchase it, subject to eligibility criteria and GST status. This gives you a variety of options including both new and used cars.
A Closer Look at Eligibility
Confirm with your tax agent or accountant whether you’re eligible for the instant tax write-off. If you are, lodge a tax return with the ATO at the end of the financial year and include the cost of the car as a deduction for that year. If you are not eligible for the instant tax write-off, you may instead be entitled to claim depreciation over the useful life of the vehicle.
If you claim the instant write-off, you cannot also claim depreciation of the car or light commercial vehicle. If your company has a turn-over of less than $10 million a year but is a subsidiary of a larger company with a total revenue of over $10 million, you may not be entitled to claim the instant asset tax write-off. The rules are complex and you should consult an expert for advice.
How You Use the Vehicle is Essential
An essential consideration is how you intend to use the vehicle. If it doubles as a family car on the weekend or is used for other non-business-related activities, you may not be able to deduct the full cost. Instead, the ATO will base the deduction on the percentage of use that is business-related.
If the car is used for business and personal purposes, only the business proportion is instantly deductible. Make sure you take this into account before purchasing a vehicle with the intent of writing it off.
Hyundai Service - Sydney
At Phil Gilbert Hyundai, we have a wide range of used and new Hyundai vehicles. Visit us at one of our two locations in Croydon and Lidcombe to view our range, hear about the latest new car deals and for expert advice, financing, servicing and repairs.
Explore the range of vehicles at our Hyundai dealership to discover your next Hyundai vehicle. Contact us today for more information. We also provide Hyundai car services to customers across Greater Sydney. Book a service or repair today at one of our two locations in Croydon and Lidcombe.