The Australian Taxation Office (ATO) has provided answers to common questions regarding how the instant asset write-off applies to vehicles.
The questions include:
- Does the IAWO apply equally to all vehicles?
- Can I claim the full cost of the car if I use it for business and private use?
- Can I claim the increased IAWO if I’ve ordered and paid for my car by 30 June 2020, but not received it?
Following the expansion of the instant asset write off (IAWO), we’ve received questions about how the IAWO applies to vehicles. We’ve answered the key questions here so you can help businesses get it right.
Does the IAWO apply equally to all vehicles?
- No. The car limit of $57,581 (for the 2019–20 financial year) applies to passenger vehicles (except motor cycles or similar vehicles), designed to carry a load less than one tonne and fewer than nine passengers.
- You cannot claim the excess cost of the car under any other depreciation rules.
- You can claim less than the $150,000 threshold for other vehicles (for example, trucks and machinery).
- The car limit does not apply to vehicles fitted out for use by people with disability.
Can I claim the full cost of the car if I use it for business and private use?
- No. If you use a car for both business and private use, you can only claim the business portion.
- The deduction is also limited to the business portion of the car limit (if it applies to the vehicle). For example, if you use your car for 75% business use, the total you can claim is 75% of $57,581.
Can I claim the increased IAWO if I’ve ordered and paid for my car by 30 June 2020, but not received it?
- No. You must have first used your car, or have it delivered ready for use, between 12 March 2020 and 30 June 2020. You cannot claim the instant asset write-off for this period if you have not received your vehicle by 30 June 2020.
Different eligibility criteria and thresholds apply to assets first used, or installed ready for use, prior to 12 March 2020.