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  • Instant asset write-off and the car limit

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    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.

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