If a business purchases a new motor vehicle and finances that purchase via a loan, are the borrowing costs incurred (loan establishment fees, loan facilitation fees etc.) subject to the same amortisation rules as loans relating to investment properties?
Are these costs to be amortised over 5 years or the term of the loan, which ever is less? Or are they immediately deductible?
Borrowing cost amortized over 5 years or term of loan, which ever is shorter. First and last year are pro-rata.
Hi @EBONYMAE,
Yes, the borrowing costs you incur are subject to the same amortisation rules that apply to investment property loans.
As @KevColl mentions, these expenses must be claimed over the shorter of either 5 years or the term of the loan, unless the total expenses are $100 or less.
You can only claim a deduction for the portion of the loan used for business purposes. If part of the loan finances private use of the vehicle, you must apportion the expenses accordingly.
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