7 June 2019 ·

Understanding Instant Asset Write Off for EOFY | Phil Gilbert Hyundai

Understanding Instant Asset Write Off for EOFY

Did you know you can claim the cost of a new car against your tax in 2019? To be able to do this, you have to be a small business owner with a turnover of less than $10 million. An instant asset write-off allows small businesses to claim immediate deductions up to a certain amount for new or second-hand plant and equipment asset purchases. This includes vehicles, tools and office equipment. To be able to claim, the assets must first be used or installed for use, in the income year you’re claiming for. This initiative has been in place since 2015 and this year, the Morrison government has changed the write-off to apply for assets costing up to $30,000 (up from $20,000).

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.

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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.