If you’re a business owner in Australia, understanding the latest tax regulations is vital, especially when it comes to vehicle expenses. The car threshold amounts for the 2024–25 financial year have been updated, and these changes can significantly impact your tax write-off when buying a car for business purposes. Here’s a guide to help you maximise your deductions when purchasing a vehicle for your business in 2025.
Income Tax: Depreciation Limits on Business Vehicles
For the 2024–25 financial year, the depreciation car limit is set at $69,674. This amount represents the maximum value you can use when calculating depreciation on a vehicle used for business purposes. To make the most of this limit:
- The vehicle must be used for business purposes.
- The vehicle should be purchased or leased for the first time in the 2024–25 income year.
When buying a car for business tax write-off in 2025, it’s important to note that if you use the vehicle for both business and personal purposes, only the portion used for business can be claimed as a deduction. Accurate record-keeping is crucial—you’ll need to document the percentage of business use to support your tax claim effectively.
GST and Vehicle Purchases: What You Can Claim
When purchasing a vehicle for your business, the car limit also plays a role in your GST claims. If the vehicle’s price exceeds the car limit, the maximum GST credit you can claim is one-eleventh of the car limit. For the 2024–25 financial year, this equates to a maximum GST credit of $6,334.
Keep in mind that GST credits do not apply to any luxury car tax (LCT) paid when buying a luxury vehicle, even if the vehicle is used for business purposes.
Luxury Car Tax (LCT): Key Thresholds for 2025
If you’re considering buying a luxury car for your business in 2025, be aware of the updated LCT thresholds:
- Fuel-efficient vehicles: Threshold is $91,387.
- Other luxury vehicles: Threshold is $80,567.
These thresholds have been adjusted according to the Consumer Price Index (CPI). While a luxury car might be enticing, be cautious of third-party offers to purchase it at a discount on your behalf. Such schemes could be designed to avoid paying LCT, which may leave you exposed to risks such as inadequate insurance or acquiring a vehicle that is damaged or defective.
Expert Advice for Buying a Car for Business Tax Write-Off
in Australia 2025
Navigating the complexities of tax regulations, especially when buying a car for a business tax write-off in Australia in 2025, can be challenging. Staying informed about changes to tax thresholds and regulations is essential for effective tax planning. For personalised advice on how these changes may impact your tax obligations and to ensure you are maximising your deductions, contact Rogerson Kenny Business Accountants. Our experienced team is here to help you navigate these complexities and make informed financial decisions for your business.
Best Tax Minimisation Strategies,
20 Effective Tax Strategies for Australian Businesses
Tax planning and by extension, minimising or deferring tax, is a critical aspect of running a successful business in Australia.
By implementing effective tax strategies, businesses can optimise their financial position, minimise or defer tax liabilities, and ensure compliance with ever-evolving tax laws.
In this checklist, we outline 20 key tax strategies that businesses should consider implementing to minimise or defer their tax and mitigate risks. Including how to reduce Capital Gains Tax Australia.
