A client has been claiming a motor vehicle deduction (log book method) with 97% business use. They were terminated during the tax year so stopped using the motor vehicle for work. Is this an assessable adjustment? Or is the adjustment income in the year they dispose of it in the future?
Balancing adjustment arises when it is disposed of or he stops using it for any purpose, not just when the use changes. https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/depreciation-and-capital-expenses-and-allowances/general-depreciation-rules-capital-allowances/disposing-or-ceasing-to-use-a-depreciating-asset
But when he does dispose of it, he will
need to consider the work use claimed to date (and any in a future job - with a special provision for calculating it if he moves to claiming under cents per km in future)
Balancing adjustment arises when it is disposed of or he stops using it for any purpose, not just when the use changes. https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/depreciation-and-capital-expenses-and-allowances/general-depreciation-rules-capital-allowances/disposing-or-ceasing-to-use-a-depreciating-asset
But when he does dispose of it, he will
need to consider the work use claimed to date (and any in a future job - with a special provision for calculating it if he moves to claiming under cents per km in future)
Thanks so much for clarifying - it's much appreciated!
22 Apr 2024 · 6 min read time
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