My car and tax, what can I claim as a business owner?
As a business owner, you can deduct the following expenses for a vehicle carrying less than one tonne and fewer than 9 passengers:
- fuel and oil
- repairs and servicing
- interest on a motor vehicle loan
- lease payments
- insurance cover premiums
- registration
- depreciation (decline in value).
If your car is used for a mix of business and pleasure, you must be able to show and prove the percentage you claim for business use to the ATO.
You cannot claim any portion used privately. It is important to understand that driving between home and work is considered private travel unless it is a special trip such as a driving to see a client or to pick up materials. This makes sense if you think about it logically. Employees cannot deduct their daily trips to and from work and neither can you.
Learn about the different calculation methods here for claiming your business motor vehicle expenses.
Changes coming
From the 1st of July 2021, the following applies:
- The car limit for 2021–22 is $60,733.
What if my car costs more than the limit? You can claim one-eleventh of the car limit amount which in 2021–22 is $5,521. - If you purchase a luxury car, you cannot make any claims regardless of how much you use the car for your business.
Luxury car tax
From the 1st of July 2021, the following applies:
- The Luxury Car Tax threshold goes up to $69,152 and $79,659 for fuel efficient cars. Any car that cost more than the threshold is considered luxury for tax purposes and attracts a Luxury Car Tax (LCT) of 33%.