Are you looking to purchase a used car using instant asset write-off scheme from the Australian government this financial year?
In this brief article, we discuss using the instant asset write-off for used and new cars, qualifying factors, and how much Sunshine Coast businesses can claim in deductions without waiting for tax time.
What is the instant asset write off?
With the instant asset write-off, used cars and new cars (up to the value of $150,000) can be purchased as business assets. This means Sunshine Coast businesses can now purchase new or used cars with the instant asset write-off, and claim deductions immediately.
How much can you claim?
Due to COVID-19, the instant asset write-off scheme’s threshold has been raised from $30,000 to $150,000 for businesses with an aggregated turnover of no more than $50 million per year.
However, this does not mean that if you buy a car for $150,000, you will be able to claim said amount through the instant asset write off. There is a threshold on the cost of each asset to consider before purchasing. Only those under the $150,000 qualify, and there are many other factors to consider relating to the depreciation of the car, including:
The Type of Car
Using the instant asset write-off, used cars (and new cars) must meet certain qualifying factors for Sunshine Coast businesses to be eligible to claim deductions. For instance, it must carry less than one tonne of equipment and fewer than 9 passengers. To estimate your potential deduction, use the ATO’s calculations.
The car you purchase must be in your possession come June 2021. It cannot be leased out for third party use. It must be used mainly for work purposes (verified with logbooks). You cannot pass the instant tax write-off onto your employees like a car allowance.
For a full list of exclusions and thresholds to take into consideration, visit the ATO website.
Using Finance for Used Cars
If you use an operating or finance lease, you may be ineligible to claim, but if you use a hire-purchase lease, you may still be eligible to claim the instant tax write-off. Check with the ATO for full details regarding finance options.
Ready to take advantage of the instant asset write-off scheme for your new car? We’re ready to help at Ken Mills Toyota on the Sunshine Coast. Visit us in the showroom or call us today!