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Write off a new car for my business?

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Initiate

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I am a tradie and want to purchase a new work car. The vehicle I am looking at is brand new and fits in with my work requirements, so it will be 100% for business. The retail cost is $35K, but I am trading in my old vehicle and getting a good deal so the price will come down to $22,000. But I only want to purchase a car if I can write-off the whole amount. Any advise on this would be great.

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ATO Certified Response

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Hi @CharliesDay,

 

Thanks for your question.

 

You can have a read of more information and calculations about Simpler depreciation for small business over at ato.gov.au which may help with your situation.

 

Thanks.

 

 

2 REPLIES 2
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Devotee Registered Tax Practitioner

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@CharliesDay

 

The $20,000 immediate write off rule was extended to 30 June 2018 in the May 2017 Budget.

 

My understanding is that the purchase value of the car is not offset by the trade-in.

 

It may be that there is a profit on sale which may reduce the cost base of the new car.

You would look at the Depreciation Schedule as at 30 June 2016 to determine the WDV of the existing car.

Remember GST would be payable on the Trade-In.

 

Depreciation on the new car would be some 15% of the purchase price ex GST in the year of purchase.

 

If your pool balance at 30 June 2017 is less than $20,000 then you could get a immediate deduction in FY18.

 

Accounting for cars is difficult as you should consult with your Tax Professional.

 

Duncan Smith

Business Advice + Tax

 

Highlighted

Most helpful response

ATO Certified Response

Community Support

Replies 0

Hi @CharliesDay,

 

Thanks for your question.

 

You can have a read of more information and calculations about Simpler depreciation for small business over at ato.gov.au which may help with your situation.

 

Thanks.