Businesses may now be able to claim 50 per cent tax break on new cars purchased. This is as a result of the federal budget announcement of an increase in the tax break for equipment purchased for business purposes that exceeds $1,000 in value.
This small print in the federal budget means that businesses will be able to claim a tax rebate every time they purchase a car. This 50 per cent tax break on new cars will be on top of any standard depreciation claimed in the first year.
In other words if a business purchases a new car, apart from claiming the standard 25 per cent depreciation, they will also be able to claim a further 50 per cent giving them a total of 75 per cent.
What will then happen in the following year is that the car will be depreciated at the standard rate of 25 per cent as normal but starting from the value of year one. To qualify for the rebate, businesses will have to meet certain conditions.
For instance the tax break will only apply for brand new cars and they must be purchased before December 31st 2009 and delivered before December 31st 2010.
However even if the primary use of the vehicle changes over time, the tax rebate may still be claimed as long as the car was originally purchased for the principal purpose of carrying on a business.
It is also important to note that the tax break is only available for up to the car limit which is currently $57,180. Pricier autos will still qualify for tax break on new cars but for only up to that figure.
For more information about the tax break on new cars visit http://minister.innovation.gov.au/Emerson/Pages/SMALLBUSINESSTAXBREAKBOOST.aspx, there you may download an eligibility flow chart.
Please Note: It is important that you seek the advice of an accountant before you act on any of what is published in this article as we provide no guarantee of the accuracy of the information in this article. No responsibility will be accepted for any loss as a result of any person or entity relying upon the information in this article.
