Maximise your tax savings
By Daniel Romeo - Thursday, 8 June 2023
Did you know the maximum amount you can claim on your business car is set to drop from July 1st 2023? Set yourself and your business up for the best financial year by claiming up to $60,000 off your business car purchase. Read on to find out more.
Every year the Australian Taxation Office (ATO) sets a maximum claimable amount known as the "car limit." For the 2022/23 financial year, the car limit was $64,741, and for the 2023/24 financial year, it is set at $68,108. However, recently it's been announced that from July 1st 2023 the capped amount will be around $20,000. Meaning instead of claiming it all in one year business owners will need to write off the car over several years.
While the choice depends in which option provides better company car tax benefits it is good to be aware that this is your last chance to claim it as a one-off cost on purchase.
Keep in mind that the car limit is applied before considering business usage. For example, if you purchased a $90,000 car in 2022 and your log book showed 70% business usage, the maximum amount you can claim would be 70% of $45,318.70. To claim the car as a one-off cost, it also must meet the Small Business Entity (SBE) instant asset write-off rules. Visit the ATO website for more information on these rules.
Additionally, the list of eligible vehicles to ensure compliance with ATO regulations will be reduced and with only a few new models remaining ready to purchase in Australia for a sub-20,000 starting price. So, if you are looking to purchase your next business vehicle and take advantage of the maximum amount before June 30th 2023 make sure to start looking now.
For detailed information and specific eligibility criteria, it's advisable to visit the ATO website or consult with a qualified tax professional. The ATO provides comprehensive resources and guidelines to help businesses understand and maximize their asset write-offs while remaining compliant.
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