Important rules around purchasing business vehicles
The ATO impose a car limit (for depreciation purposes) to any vehicle designed to carry passengers and a load less than 1 tonne (payload or GVM), which at the moment is $57,581 for the 2019-20 year and will be increased to $59,136 for 2020-21 year.
An issue we are seeing is clients are purchasing business vehicles (mainly dual-cab utes) that are costing more than the car limit and expecting a deduction for the full amount. However, upon review of the vehicle at tax time, the payload is in fact less than a tonne and we can only claim up to the car limit as a deduction.
It’s important to have an understanding of the rules around purchasing business vehicles and their deductibility before signing the dotted line, especially on the higher model vehicles.
Please click on this link to the ATO website outlining the rules for claiming vehicles (see heading ‘Car Limit’ halfway down the page) or contact OBT’s friendly Tax & Accounting team in Gatton on 07 5462 2277 BEFORE you commit to purchasing a vehicle for your business.