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Equity(Dynamo)Dynamo
12 July 2023

My business purchased a vehicle with finance. The business will use it 50% for business and 50% for private purposes.


Excluding GST, please see below

Vehicle price: $100,000

Car limit 2022-23: $64,741

Financed amount: $100,000

Interest portion out of annual repayments (Principal and Interest) for 2022-23: $4,000


I understand that I can only claim depreciation up to the car limit.

For interest expenses of my business, which of the following is the correct interest expense claimable and deductible for my business?

  1. $4,000
  2. $4,000 * 50%
  3. $4,000 * $64,741 / $100,000
  4. $4,000 * $64,741 / $100,000 * 50%
  5. something else (If any of the above is not correct, please advise me how to calculate the interest expense in this case)



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2,957 views
3 replies

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Most helpful reply

Glenn4802(Devotee)Devotee
12 July 2023

The interest doe not need to be apportioned because of the luxury car limit, per this ATO advice.


Whether you need to adjust the amount for private usage can vary according to the type of entity and who is using the vehicle for private travel.


If you operate the business as a sole trader or partnership and you undertake the private travel, the deductible amount is reduced (option 2 above).


If an employee of the business uses the car for private travel, the full amount of the interest is deductible (option 1 above). However the FBT provisions would apply to account for the private use. This would include situations where a company shareholder/employee was to use the car.

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Most helpful reply

Glenn4802(Devotee)Devotee
12 July 2023

The interest doe not need to be apportioned because of the luxury car limit, per this ATO advice.


Whether you need to adjust the amount for private usage can vary according to the type of entity and who is using the vehicle for private travel.


If you operate the business as a sole trader or partnership and you undertake the private travel, the deductible amount is reduced (option 2 above).


If an employee of the business uses the car for private travel, the full amount of the interest is deductible (option 1 above). However the FBT provisions would apply to account for the private use. This would include situations where a company shareholder/employee was to use the car.

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Equity(Dynamo)Dynamo
16 July 2023

Many thanks Glenn4802 and Bruce4Tax


The vehicle purchased is registered under my company business, and I am using it 50% for business and 50% for private purposes.


Rather than applying for FBT provisions for the private use, can I just claim 50% of all motor vehicle related expenses including claimable depreciation to make it simple ? (as I think claiming 50% is still reasonable rather than applying for FBT provisions)

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How to calculate interest expenses of motor vehicle finance? | ATO Community