Buying a car for your business? The government might be able to help you out at tax time.
In addition in a reduction of the company tax rate, the threshold for immediately deductible items has been raised from $25,000 to $30,000; meaning that any equipment purchased from 29 January 2019 for your business (including cars) will be written off on your tax until June 30, 2019.
Effective until June 30, 2019, assets up to $30,000 ex GST (excluding stock, horticultural plants and software developed in-house) are eligible for a 100% tax write-off for any business with a turnover less than $50 million, up from $10 million.
This form of accelerated depreciation allows you to reduce your taxable income by $30,000 – resulting in a cash flow benefit relative to the rate you’re taxed at.
Global accounting firm BDO uses the example of a small business, registered for GST, purchasing a vehicle with a GST-inclusive value of $32,999 ($29,999 ex GST). The vehicle is purchased between 2 April 2019 and 30 June 2020 and used 100% in business. If the vehicle is used 100% for your business, you will be entitled to an immediate deduction of $29,999 as well as being able to claim the $2,999 as a GST input credit.
In real terms, this means that small businesses will have a less complicated tax return to complete, as their assets will either qualify for the immediate write-off or, if the asset is valued over $30,000, with depreciation based on useful life. For example, the ATO assesses the useful life of a business vehicle at a maximum of 8 years.
In order to make the most of the deductions, businesses would have to claim before June 30 of this year in order to maximise cash flow benefits with any assets claimed.
as new furniture for a café or extra water tanks for a nursery). In terms of business vehicles, you can claim the tax deduction on any new or used cars that are invoiced at up to $20,000 ex GST. This could be a used van to make your café mobile during lunchtimes, or upgrading to a new cab chassis ute to fit an existing tray setup.
$30,000 can be fully written off, but not immediately. You can group
your assets that exceed the threshold in order to depreciate them at the
same rate (15% in the first year, 30% for every year after that).
It is also worth noting that if an existing asset is in a depreciation pool and will be valued at less than $30,000 by June 30, 2019; it can be written off under this new method of accelerated depreciation.
Motorama have one of the largest selections of quality pre-owned cars for sale in Brisbane. If you are in the market for a second hand car, we will have the right car for you. We stock cars across all price ranges starting for under $10,000, at our convenient dealer locations in Moorooka, Springwood and Browns Plains.
We specialise in all things auto, and only stock the best quality cars from brands including Toyota, Mitsubishi, Holden, Ford, Nissan, Hyundai, Kia, Honda, Subaru, Volkswagen, Mazda, BMW and many more.
Financing your car at Motorama is quick and simple, that's why 1 in 2 retail customers financed through Motorama in the past year.
Our fully trained and accredited Business Managers are specialists in
automotive finance and insurance. They are more than happy to answer
any questions you may have during the car buying or financing process.