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Car deduction

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Currently have a privately owned vehicle that is used for work 75% of the time. Looking to do a trade in on another vehicle . The loan on the current vehicle is $20,000 - but have only been offered $17,000 for the trade in.

is 75% of the $3000 " loss" tax deuctable??

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Hi @Maze,

 

Welcome to our Community!

 

The $3,000 difference isn't a tax deduction as the vehicle is a depreciating asset and you have to work out the rules for taxation on disposal of depreciating assets.

 

You will need to compare the sale proceeds from your vehicle with the depreciated (written down) value of your vehicle at time of sale, referred to as ‘adjustable value’. You would then declare 75% of this amount as either part of your assessable income or as a deduction amount.

 

For the 25% component you work out an amount of capital loss able to be claimed also. You can find information about Disposal of a depreciating asset on our website.

 

This only applies if you own the vehicle and have borrowed money to buy the vehicle. If you hold the vehicle under an operating lease or have entered into a novated lease these rules do not apply.

 

If you have further questions, you can phone us on 13 28 61 between 8am - 6pm, Monday to Friday to speak with an operator.

 

Thanks, JodieH.

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Most helpful response

ATO Certified Response

Community Support

Replies 0

Hi @Maze,

 

Welcome to our Community!

 

The $3,000 difference isn't a tax deduction as the vehicle is a depreciating asset and you have to work out the rules for taxation on disposal of depreciating assets.

 

You will need to compare the sale proceeds from your vehicle with the depreciated (written down) value of your vehicle at time of sale, referred to as ‘adjustable value’. You would then declare 75% of this amount as either part of your assessable income or as a deduction amount.

 

For the 25% component you work out an amount of capital loss able to be claimed also. You can find information about Disposal of a depreciating asset on our website.

 

This only applies if you own the vehicle and have borrowed money to buy the vehicle. If you hold the vehicle under an operating lease or have entered into a novated lease these rules do not apply.

 

If you have further questions, you can phone us on 13 28 61 between 8am - 6pm, Monday to Friday to speak with an operator.

 

Thanks, JodieH.