Getting your Car Tax right
Following on from our previous article about Fringe Benefits Tax, it is important to keep up to date with changes in taxation limits and rates for cars you might be using in your business.
Income tax There’s an upper limit on the cost you use to work out the depreciation for the business use of your car or station wagon (including four-wheel drives). For this purpose, you use the car limit that applies to the year you first use or lease the car.
Goods and services tax (GST) Generally, if you purchase a car and the price is more than the car limit, the maximum amount of GST credit you can claim is one-eleventh of the car limit amount.
Luxury car tax (LCT) From 1 July 2020 the LCT threshold increased to $ $68,740. The LCT threshold for fuel efficient cars increased to $77,565 for the 2020–21 financial year. Remember, the LCT value of a car generally includes the value of any parts, accessories or attachments supplied or imported at the same time as the car.