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Re: What cost forms part of the $30K business tax write off for MV

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Newbie

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Hi there,

 

I just bought a MV for business use and its under $30K asset write off threshold in the 2019 financial year. However, I am yet to pay the stamp duty and most probably will be paid after 30 June 2019. At what stage do I include the stamp duty expense. I am on cash basis?

 

Can I claim the cost of M/V in 2019 financial year and then the stamp duty in 2020 financial year? please advise.

 

Thanks 

 

Sarae

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Hi @Sarae3211,

 

Welcome to our Community!

 

Where you meet the instant asset write off requirements and you start to use the depreciating asset in the year of purchase, you can claim the ‘cost’ of the depreciating asset. The ‘cost’ includes the ‘first element of cost’ being the purchase price and any amounts incurred in relation to holding the asset.

 

In your case, the stamp duty liability will have been incurred during 2019 year and been in relation to holding the asset. If the stamp duty was not incurred in the 2019 year but paid or incurred in the 2020 year then an instant asset write off would also apply to allow a deduction in 2020 to the extent of second element of cost, being the stamp duty in the 2020 year.

 

Thanks, JodieH.

 

 

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Taxicorn

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Cost base of the vehicle includes the stamp duty.

You can not claim anything until it is ready to be used.

If it is not ready to be used until after June 30th then it all should go on the 2020 tax return.

If you haven't paid stamp duty then legally you don't own it yet.

 

https://www.ato.gov.au/Business/Depreciation-and-capital-expenses-and-allowances/In-detail/Depreciat...

 

 

Newbie

Replies 0

Thanks for your answer. Though the wording to this link is a bit airy fairy. It says "Using the simplified depreciation rules, assets costing less than the relevant instant asset write-off threshold are written off in the year they are first used, or installed ready-for-use"

 

Where it says "OR" I interpreted that although I know stamp duty is part of being ready for use but its just a delay in payment because I haven't received the transfer papers yet from Department of Transport. I am already using the MV for business use in June 2019. 

 

If it says "AND" installed ready for use, then I interpret that the cost of MV and stamp duty will be claimed in 2020, even though I bought the car in June 2019 and paid for stamp duty in July 2019.

 

What are your thoughts?

 

 

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ATO Certified

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Replies 1

Hi @Sarae3211,

 

Welcome to our Community!

 

Where you meet the instant asset write off requirements and you start to use the depreciating asset in the year of purchase, you can claim the ‘cost’ of the depreciating asset. The ‘cost’ includes the ‘first element of cost’ being the purchase price and any amounts incurred in relation to holding the asset.

 

In your case, the stamp duty liability will have been incurred during 2019 year and been in relation to holding the asset. If the stamp duty was not incurred in the 2019 year but paid or incurred in the 2020 year then an instant asset write off would also apply to allow a deduction in 2020 to the extent of second element of cost, being the stamp duty in the 2020 year.

 

Thanks, JodieH.

 

 

Newbie

Replies 0

Thank you so much for clarifying!

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