Here are the top tips that can help you make the most out of your company vehicle when it comes to tax deductions
- Instant asset tax write-off -Eligible business, based on annual turnover, can claim depreciation of an asset in full instead of a percentage every year. This only applies to assets with a purchase price under the ATO stipulated limit for that financial year. For instance, if you buy a car for your small business, rather than claiming a yearly deduction for depreciation over the life of the car, you can deduct depreciation in full from your tax bill from the same financial year as long as the car is used during that year. Check the ATO website for eligibility criteria and current thresholds.
- If your business is registered with the ATO for GST, you can knock off 10% (the GST) of the purchase price of your vehicle straight away.
- You can avoid paying Fringe Benefits Tax (FBT) by making sure your company vehicle is not used by employees for personal travel.
- If you lease a vehicle for business use, you can claim the entire lease repayment amount in tax deductions.
- The interest charged on car loans can be claimed in tax returns.
- By ensuring that your vehicle is used solely for business purposes, you can claim back 100% of its operating costs like fuel and maintenance for example.