From 1 July 2023, the following car threshold amounts will apply for the 2023–24 financial year.
- The car limit for 2023–24 is $68,108.
- This is the maximum value that can be used for calculating depreciation on the business use of a car first used, or leased in the 2023–24 income year.
- As a business owner, you can claim a tax deduction for expenses of certain motor vehicles used in running your business.
- If you use a motor vehicle for both business and private use, you must be able to correctly identify and justify the percentage that you are claiming as business use. The percentage that is for private use isn't claimable.
Goods and services tax (GST):
- If you purchase a car and the price is more than the car limit, the maximum GST credit you can claim (except in certain circumstances) is one-eleventh of the car limit, which is $6,191 in 2023–24.
- You can't claim a GST credit for any luxury car tax you pay when you purchase a luxury car, regardless of how much you use the car in carrying on your business.
Luxury car tax (LCT):
- The LCT threshold is $89,332 for fuel-efficient vehicles, in line with an increase to the motor-vehicle purchase sub-group of the Consumer Price Index (CPI).
- It is $76,950 for all other luxury vehicles, in line with an increase in the 'All Groups' CPI.
- Remember, the LCT value of a car generally includes the value of any parts, accessories or attachments supplied or imported at the same time as the car.
- Generally, LCT will apply if you're registered or required to be registered for GST and you sell or import a luxury car. This includes retailers, wholesalers, manufacturers and other businesses that sell luxury cars.
Remember, a registered tax or BAS agent can help you with your tax.Make sure you understand the luxury car tax thresholds that apply.