Tax Limits for Cars 2020/21

From 1 July 2020, the Car Cost Limit  is $59,136 (increased from $57,581 - 2019/20).

The Car Cost Limit is used for calculation of tax deduction claims for depreciation - a “decline in value”.

The Car Cost Limit is also used for calculation of GST Input Tax Credit (ITC) when a car is purchased.

Generally, the maximum amount of GST credit you can claim is one-eleventh of the car limit amount, even if the price is more than the limit.

This means that the maximum GST Input Tax Credit (ITC) on motor cars is limited to $5,376, which is 1/11th  of the Car Depreciation Limit.

The Car Cost Limit is different to Luxury Car Tax (LCT) .

From 1 July 2020 the tax thresholds for Luxury Cars are:

'Standard' luxury cars $68,740 (increased from $67,525 - 2019/20)
'Fuel efficient' luxury cars $77,565 (increased from $75,526 - 2019/20

Cars with a luxury car tax (LCT) value over the LCT threshold attract an LCT rate of 33%.

In general, the value of a car includes the value of any parts, accessories or attachments supplied or imported at the same time as the car.

Vehicles that have a fuel consumption that does not exceed 7 litres per 100 klms is classed as "fuel efficient" under the vehicle standards in force under section 7 of the Motor Vehicle Standards Act 1989

For further information on tax rates and thresholds, visit the following ATO links:

• ATO - Cars and Tax 
• When Luxury Car Tax Applies
• Definition of "Fuel Efficient" Car
• Claiming GST Credit for Purchase of a Motor Vehicle
• Claiming Under Instant Asset Tax Write-Off $150,000

Need more information? Contact us and we'll be happy to answer any questions or provide further details.

We can help you determine a preferred finance structure that meets ATO guidelines and explain how it works and relates to your circumstances.

Call us today on (03) 9005-6633 and experience the difference!