Car depreciation limit confirmed for instant asset write-off

The VACC (Victorian Automobile Chamber of Commerce) has today disseminated advice from Fordham Business Advisors concerning the recently announced changes to the instant asset tax write-off.

According to Fordham’s, the limit for depreciation for any vehicle defined as a car remains capped at a ceiling of $57,581. Buyers can only claim depreciation in full on vehicles costing more than that figure if the vehicle is not a ‘car’ as such, meaning it has to be “designed to carry a load of less than one tonne and fewer than nine passengers”.

That would exclude even large American dual-cab pick-ups that are now being converted to right-hand drive in Australia, let alone smaller, but still high-priced workhorses like the Ford Ranger. Buyers would be able to claim depreciation on the component up to the ceiling figure, however.

Fordham’s document confirms the government’s strategy, lifting the limit for instant tax write-off of assets to $150,000 for businesses earning up to $500 million in a year, for assets purchased between now and the end of the current financial year. An accelerated depreciation deduction is also available for assets purchased and ‘installed’ between March 12 this year and June 30 next year.

Although the legislation is yet to pass through Parliament, it has the backing of the Labor opposition, the Fordham document reveals.

The business advisory firm also suggests dealers exercise care when selling a vehicle to a business known to be intending to claim the depreciation in the same financial year of purchase.

“We would caution dealers as part of any direct marketing campaigns regarding this Instant Asset Write-off to ensure that they do not directly provide tax advice to their customers, but rather direct customers to ensure they have sought tax advice from their own tax agent,” the company stated in the document.