When it comes to crazy tax laws this one certainly ticks a few boxes..
Lets start by explaining the car depreciation threshold. The car threshold is the maximum depreciation that can be claimed on a car, regardless of how much the vehicle actually costs you.. Those thresholds are:
Year | Car limit |
2019–20 | $57,581 |
2020–21 | $59,136 |
However, it's important to note the rule only applies to luxury vehicles not commercial vehicles. There is no limit for commercial vehicles.
So what's the difference?
A car is any vehicle over the threshold that is not a commercial vehicle by definition;
A commercial vehicle is any vehicle with a 1 tonne payload or more, or able to carry nine or more passengers.
How the Car Limit works in TaxTank
In TaxTank we simplify this rule by providing two vehicle categories:
Motor vehicles (cars)
Motor vehicles (commercial vehicles)
If you select Motor vehicles (cars) we will automatically apply the relevant luxury car limit to ensure the depreciation claim is calculated correctly.
Want to know more about the car depreciation threshold? Visit our friends at the ATO