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Trading in a car

Newbie

Views 135

Replies 5

Hello, 

i have upgraded my car to carry more equipment, 

 

i recieved a trade in discount off my new car which was less than the value of the car. 

I didnt recieve any money for the car do i put the termination value as $0? 

and what is the adjusted value? 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Community Support

Replies 4

Hi @Speediekay

 

When it come to depreciation you are seeking to do a balancing adjustment here. Whatever that value was. Obviously the difference here is what you would have paid with no trade less what you did pay.

 

So you calculate the balancing adjustment amount by comparing the asset's
termination value (for example, the sale proceeds) with its adjustable value (the cost
of the asset less depreciation deductions). If you want more detail here see our Depreciation Guide 2021 page 21. You will see a heading there of Termination value that talks to the balancing adjustment.

5 REPLIES 5

Most helpful response

ATO Community Support

Replies 4

Hi @Speediekay

 

When it come to depreciation you are seeking to do a balancing adjustment here. Whatever that value was. Obviously the difference here is what you would have paid with no trade less what you did pay.

 

So you calculate the balancing adjustment amount by comparing the asset's
termination value (for example, the sale proceeds) with its adjustable value (the cost
of the asset less depreciation deductions). If you want more detail here see our Depreciation Guide 2021 page 21. You will see a heading there of Termination value that talks to the balancing adjustment.

Newbie

Replies 3

Thanks Mark, 

I appreciate your answer, but i didnt get any sale proceeds I essentially upgraded my car and paid the excess. 

Does that make the termination $0 or do i put what the discount was? And the for the balancing adjustment i put what? 

ATO Community Support

Replies 2

Hi @Speedikay

 

If your trade in was worth nothing then yes it will be $0. Sales are never straight forward however the simple test usually is if you hadn't given over the car what would you have had to pay. If the discount was going to occur with or without the trade then $0 it is. In this case the value of the car would be written off in the balancing adjustment.

Newbie

Replies 1

Ok do if the trade in discount was $12000, would i put my termination value as $12000 and then minus the depreciation of the year or the whole time i have had it? And then for the new car the price i actually paid?

ATO Community Support

Replies 0

Hi @Speediekay

 

Your termination value of the car you traded in was worth $12,000. You received this payment as a reduction in value of the new car. You've received the "value" in a different form.

 

This means your balancing adjustment for that asset is a termination value of $12,000.

 

The actual value of the new vehicle - before the trade in - is it's actual value for depreciation purposes.

 

You can read about balancing adjustments on our website.