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Re: Car leasing

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Newbie

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Hi, I work as a sole trader (health care interpreter) and travel between hospitals and different specialists. Can I purchase a car under Hire Purchase Agreement and deduct the repayments as expenses?

If yes, what would be the vehicle price limit that I can purchase?

 

If the vehicle price is over the limit, canI pay the difference and then claim the rest?

 

Thanks

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Hi @Sindbad ,

 

You can claim payments you make under a hire-purchase agreement as a business expense.

 

You need to ensure you separate private use from business use and correctly identify and justify the percentage that you're claiming as business use. This is an area where we often see errors made. You can use a logbook or diary to record private versus business travel.

 

The car cost limit for depreciation for 2020-21 is $59,136. An asset must be first bought and used, or installed ready-for-use in the year you claim the deduction under simplified depreciation rules.

 

The instant asset write-off is limited to the business portion of the car limit for the relevant income tax year. For example, the car limit is $57,581 for the 2019–20 income tax year. If you use your vehicle for 75% business use, the total you can claim under the instant asset write-off is 75% of $57,581, which equals $43,186.

 

You cannot claim the excess cost over the car limit under any other depreciation rules. For a worked example, refer to example 1.

 

You wouldn't be able to pay the difference and then claim the rest please see Cost of asset exceeds threshold

and Work out your deduction (located directly below the Cost of asset exceeds threshold information).

 

Calculation methods for claiming business motor vehicle expenses for Sole trader or partnership

 

I hope this helps and let us know if you have any further questions,

JasonT

2 REPLIES 2

Champion

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@Sindbad its not that easy to answer you need to look at the different ways you can claim the deduction. This page should help.

https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/vehicle-and-travel...

 

Highlighted

Most helpful response

Community Support

Replies 0

Hi @Sindbad ,

 

You can claim payments you make under a hire-purchase agreement as a business expense.

 

You need to ensure you separate private use from business use and correctly identify and justify the percentage that you're claiming as business use. This is an area where we often see errors made. You can use a logbook or diary to record private versus business travel.

 

The car cost limit for depreciation for 2020-21 is $59,136. An asset must be first bought and used, or installed ready-for-use in the year you claim the deduction under simplified depreciation rules.

 

The instant asset write-off is limited to the business portion of the car limit for the relevant income tax year. For example, the car limit is $57,581 for the 2019–20 income tax year. If you use your vehicle for 75% business use, the total you can claim under the instant asset write-off is 75% of $57,581, which equals $43,186.

 

You cannot claim the excess cost over the car limit under any other depreciation rules. For a worked example, refer to example 1.

 

You wouldn't be able to pay the difference and then claim the rest please see Cost of asset exceeds threshold

and Work out your deduction (located directly below the Cost of asset exceeds threshold information).

 

Calculation methods for claiming business motor vehicle expenses for Sole trader or partnership

 

I hope this helps and let us know if you have any further questions,

JasonT