Business Car Tax – As Much as We Love Our Cars
Let’s face it. Australians love their cars. From the old steam cars, the Phaeton, to the first petrol-driven cars – the Tarrants and then the mass production of Holdens. Australia’s automotive industry is still one of the all-time greats in designing and developing large sized passenger’s vehicles since 1948. Australia is quite isolated and historically it is known to be quite proficient at building its own things, cars inclusive. Although, the companies are still operating and expanding today, the total production of them however sees a great fall in 2009 as the Asian and European cars take over the Australian market, which leads the Holden and Toyota Australia factories permanently closing in 2017. While this leads to the more affordable production and profitable import of cars by Asian and European countries, the demand for cars both for personal and business purposes is set to rise.
According to The Australian Bureau of Statistics Australian motorcycle registration continues to grow (18.8 million registered motor vehicles in Australia in 2017). Western Australia has the highest proportion of Motor cycles per head of population, at 49 per 1,000 people while the Northern Territory faces a decrease of car registration by 1.5 per cent. That being said, there are also a few more car facts that both the Australian average car and Luxury driver need to be aware of from a tax perspective. Particularly, new regulations apply for the business use of a car or a motor-powered vehicle designed to carry less than nine passengers with a load of less than two tonnes. This excludes motorcycles or similar vehicles.
From 1 July 2018, The Australian taxation Office (2018) claims that the following car threshold amounts apply.
Business Car Tax – Income Tax
To work out the depreciation for the business use of your car or station wagon (including four-wheel drives), there is an upper limit on the cost you adopt to do so. The car limit for 2018-19 is $57,581 and you should be using the car limit that applies to the year you first use or lease the car.
Business Car Tax – Goods and Services Tax (GST)
You can’t claim a GST credit for any car that exceeds the price of the car limit, regardless of how much you use the car in carrying on your business.
However, if the car price exceeds the maximum amount of GST credit you can claim is one-eleventh of the car limit amount.
Business Car Tax – Luxury Car Tax
From July 1, 2018
The tax threshold for luxury cars increases to $66,331.
The threshold for fuel efficient luxury cars for the 2018-19 financial year remains at $75,526.
NOTE: the value of a car includes the value of any parts, accessories or attachments supplied or imported at the same time as the car.
Business Car Tax -NOTE: From May 12, 2015 till June 30, 2019
If you bought an asset after May 12, 2015 and it cost less than $20,000, you are entitled to claim for a business asset deduction.