Buying a car with the $150,000 instant asset write off

We’ve had a lot of clients ask us, “how does the increased instant asset write-off of $150,000 apply to a purchase of a car?”
Here are a few things to consider:

When you’re purchasing a car, you have to keep in mind that there are separate rules and limits around how much you can depreciate for a motor vehicle. The maximum you can depreciate is actually a lot lower than the instant asset write-off.

The instant asset write-off is $150,000 (recently extended until the end of this calendar year), but the car depreciation limit is $57,581, plus GST if your business is registered for GST. Keep in mind, there’s also a limit that you can claim for the GST which is actually one-tenth of the original figure ($57,781), so the maximum GST is $5,758 for the GST claim. (This is also before adjusting for any private use.)

If you’re looking upwards of a 60K car, you may want to double check your tax expectations because you can’t just write-off the whole thing. This applies to what the ATO calls “motor vehicles”, but not quite what they call “commercial vehicles”.

Vehicles such as Utes could be single cab, dual cab, or trucks as well. They are not limited by that $57,581 depreciation limit. What you look for is, has it got a payload of more than 1 ton, or is it designed to carry more in payload kilos than it is to passenger kilos? You can get the specs of the vehicle and have it assessed.

If you’re ever unsure, please get in touch with your accountant, and make sure you know what the tax implications of purchasing a car is.

Don’t think that just because the instant asset write-off was $150,000, you can go and buy a Range Rover, and expect to claim the whole lot on tax.