How to deduct tax on the cost of vehicles in business
(Louis Ng), Wu Qiyang
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Corporate and personal business tax declarations, and how to deduct the cost of using a car in personal tax declarations are frequently encountered problems in business management. Related requirements in the tax law include:
Whether it is a luxury car (Luxury car)If you buy a luxury car for business and work, the part that exceeds the luxury car tax standard cannot be reimbursed or deducted for GST, regardless of the proportion of the car used for business.
Car limit (Car limit)The tax law stipulates that there is a limit on the reimbursement of vehicle expenses for business vehicles. In the 2019-2020 fiscal year, the ATO announced the vehicle cost limit Car Limit is $57,581 (including GST).For example: Ms. Zhou spent 68043 Australian dollars (including $6,023.60 GST and $1,783.15 luxury car tax). The vehicle was used exclusively for business. Due to the limitation of the vehicle reimbursement ceiling, Ms. Zhou declared the purchase of the car for $57581 (including 5234 Australian dollars GST can apply Tax refund).
Proportion of business vehiclesWhen part of the vehicle is used for business and part for private use (Private use), the tax law stipulates that the proportion of business vehicles should be determined in accordance with appropriate methods. Only the part of business vehicles can be used for reimbursement of business costs and application for refunds. GST. For example, in the above example, if Ms. Zhou plans to use 50% of the car in the business, then her business declares a car expense of 28733 Australian dollars (including 2612 Australian dollars GST can apply for a tax refund, 5234 Australian dollars 50%).