Instant Asset Write-off and the Car Limit

14 September 2020

If your business is eligible to claim the instant asset write-off, you need to consider the car limit. The car limit is the maximum depreciation expense you can claim for a car.

The car limit applies to the cost of some passenger vehicles. It applies to passenger vehicles designed to carry a load less than one tonne and fewer than nine passengers. It does not apply to motorcycles or similar vehicles, or to vehicles fitted out for use by people living with a disability.

The car limit is:

• $57,581 for the 2019–20 income tax year
• $59,136 for the 2020–21 income tax year.

Here are some tips to help you get it right:

• If the car limit applies to your vehicle, you can only claim a deduction for the business portion of the car limit.
• To use the instant asset write-off you must have used your vehicle, or had it delivered ready for use, between 12 March and 31 December 2020.

When calculating car depreciation amounts:

• If you’re registered for GST and can claim the full GST credit, exclude the GST amount you paid on the car.
• If you’re not registered for GST, include the GST amount you paid on the car.
• You can’t claim the excess cost over the car limit under any other depreciation rules.

Remember, registered tax agents can help you with your tax.

Find out about:

• Instant asset write-off for eligible businesses
• Claiming a tax deduction for motor vehicle expenses