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Hi @MollyM
If you're registered for GST you take away the GST credit claimed from the total cost of the car. If the remaining balance is below the car limit then you depreciate that amount. If the remaining balance is more than the car limit then your depreciation amount is reduced to the car limit.
If you're using the threshold for 2020 of $57,581 and the the car cost $80,000 you can claim GST credit of $5234 (1/11th of the car limit).
$80,000 - $5,234 = $74,766. This is above the car limit so your depreciation amount is reduced to $57,581.
The threshold excludes GST if you're registered but includes GST for businesses not registered.
On our website there's a section about how GST applies under the examples about the car limit.
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Hi @MollyM
If you're registered for GST you take away the GST credit claimed from the total cost of the car. If the remaining balance is below the car limit then you depreciate that amount. If the remaining balance is more than the car limit then your depreciation amount is reduced to the car limit.
If you're using the threshold for 2020 of $57,581 and the the car cost $80,000 you can claim GST credit of $5234 (1/11th of the car limit).
$80,000 - $5,234 = $74,766. This is above the car limit so your depreciation amount is reduced to $57,581.
The threshold excludes GST if you're registered but includes GST for businesses not registered.
On our website there's a section about how GST applies under the examples about the car limit.
You're correct. The car limit applies to passenger vehicles (except motorcycles and similar vehicles) designed to carry a load of less than one tonne and fewer than nine passengers. A vehicle that has more than a one tonne carrying capacity isn't subject to the car limit.
I am still stuck on this, as the ATO does not give the example when the purchase price EXCL gst is is less than the threshold but more than the (threshold less GST)
In your example above, you mention that the depreciation is reduced to $57,581, but if im GST registered, i have already claimed GST of $5234.64 ($57,581/11) therefore, wouldn't this reduce my threshold to $52,346.36 ($57581-5234.64)
I would have thought, if i purchase a car for $80k, I get to claim the GST input tax credit of $5234.64 and depreciation on the reduced amount of $52,346.36 only.
Please clarify, thanks in advance
Hi @MollyM
The car limit is the amount you can depreciate. GST registered business can reduce the cost of the car by the GST credit claimed (1/11th of the car limit) before applying the car limit to work out the depreciation.
In your own example you're reducing the $80,000 to the car limit first and then reducing the car limit by the GST claimed.
Click the previous link to our website mentioned above for car limit and look for the heading How GST applies. Paragraph 2 has an example about purchasing a car for $60,000 which is over the car limit. GST is deducted first from the $60,000 and the remainder is depreciated.
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