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Car depreciation limit

Jack Malarkey

Well-Known Member
The Australian Taxation Office recently updated its article in its Small Business Newsroom about the car depreciation and GST limits and luxury car tax.

(https://www.ato.gov.au/Newsroom/smallbusiness/Lodging-and-paying/Cars-and-tax/?sbnews20170222)

Here is the updated article:
  • Cars and tax


    1 February 2017

    This article has been updated.

    From 1 July 2016 the following car threshold amounts apply.

    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). You use the car limit that applies to the year you first use or lease the car.

    The car limit for 2016-17 is $57,581.

    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.

    You can't claim a GST credit for any luxury car tax you pay when you purchase a luxury car, regardless of how much you use the car in carrying on your business.

    Luxury car tax

    From 1 July 2016 the luxury car tax threshold for luxury cars increased to $64,132.

    The threshold for fuel efficient luxury cars for 2016-17 remains at $75,526.

    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.
 

Nai

New Member
Many thanks again Jack for your help, I really appreciate it. Please help me on one more issue. I have bought new car with $32,000, which has $3200 GST. I used about 80% for business uber, so UBER portion of GST is $2416. Now when I have compiled last quarter's uber income, it is $12,000 i.e. GST only $1200; fuel GST tentatively $350; Now if I claim the car purchase GST $2416 in the non capital purchase, the total GST claim would be ($2416+$350) $2766 whereas total GST in income is $1200. So now how it would work? Do i get back from ATO $1766 instead of paying. Or how do I report the vehicle purchase GST??? I would highly appreciate for a guidance from you, Jack or any other who has similar experiences. Many thanks in advance.
 

Jack Malarkey

Well-Known Member
  • Thread Starter Thread Starter
  • #3
Nai, yes if your GST input tax credits exceed the GST you need to pay, the Tax Office refunds the excess to you.

Note that if a price incudes GST, the GST component is one-eleventh of the total.

So the GST component on the purchase of a car for $32,000 would be $2909.09. And 80% of that would be $2,327.27.

The GST payable on total fares of $12,000 would be $1,090.91.

So you would need to adjust your calculations to reflect the correct GST component but the principle that you would obtain a refund for this quarter remains.

Note also that from 1 July 2017, the Tax Office is simplifying the BAS but this will not affect the outcome. See my original post here about this: https://uberpeople.net/threads/new-simpler-bas-from-1-july-2017.172510/.
 
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Icecool

Well-Known Member
Many thanks again Jack for your help, I really appreciate it. Please help me on one more issue. I have bought new car with $32,000, which has $3200 GST. I used about 80% for business uber, so UBER portion of GST is $2416. Now when I have compiled last quarter's uber income, it is $12,000 i.e. GST only $1200; fuel GST tentatively $350; Now if I claim the car purchase GST $2416 in the non capital purchase, the total GST claim would be ($2416+$350) $2766 whereas total GST in income is $1200. So now how it would work? Do i get back from ATO $1766 instead of paying. Or how do I report the vehicle purchase GST??? I would highly appreciate for a guidance from you, Jack or any other who has similar experiences. Many thanks in advance.
Just a note . You can only claim all of the gst credits in one go only if you paid the cars full amount in cash otherwise you have to claim the gst credit on a quarterly basis
 

Icecool

Well-Known Member
By law, there should be GST on the purchase if the seller claimed a GST input tax credit when they purchased it.
its a private seller he need to have an abn and registered GSt first .
why would a private seller want to do that unless his using the car for business
 

Jack Malarkey

Well-Known Member
  • Thread Starter Thread Starter
  • #10
its a private seller he need to have an abn and registered GSt first .
why would a private seller want to do that unless his using the car for business
The seller might, for example, be an Uber driver who claimed a GST input tax credit on purchase of the car.

(In this context, I understood a private seller as a seller who's not a car dealer.)
 
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Icecool

Well-Known Member

Jack Malarkey

Well-Known Member
  • Thread Starter Thread Starter
  • #12
Show me the law that stated there are gst on secondhand goods . A business seller mean you are in the business of buying and selling good that dosent including an uber driver
http://law.ato.gov.au/atolaw/view.htm?docid="GSD/GSTD20132/NAT/ATO/00001"
There are special rules in the GST legislation relating to second-hand motor vehicles.

See https://www.ato.gov.au/Business/GST/In-detail/Your-industry/Motor-vehicle-and-transport/GST-and-motor-vehicles/?anchor=Disposingofamotorvehicle#Disposingofamotorvehicle.
 

Icecool

Well-Known Member
So ok how dose it work . If I was doing uber and I Claimed the gst credit but before I sell my car . I cancelled my abn and gst . So how do I Paid the ato the gst that I have charge the customer . How can I charge the customer if I don't have an abn or registered for gst . Do I need to reapply for the gst and abn before I sell the car
 

Jack Malarkey

Well-Known Member
  • Thread Starter Thread Starter
  • #14
So ok how dose it work . If I was doing uber and I Claimed the gst credit but before I sell my car . I cancelled my abn and gst . So how do I Paid the ato the gst that I have charge the customer . How can I charge the customer if I don't have an abn or registered for gst . Do I need to reapply for the gst and abn before I sell the car
I don't know enough to answer those questions.
 
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