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Car tax deductions in Australia & elsewhere

Subaru_X

Well-Known Member
Greetings fellow ants!

I would like to compare tax regulations on depreciating assets with running costs such as cars, in other countries compared to Australia. Here is a brief on what we have down under:
  • As independent contractors we are registered under an Australian Business Number
  • When a new or used car is purchased for the business we can immediately claim the GST paid as a GST credit. This credit can carry over into subsequent business periods if it is more than the debt
  • If the value of the vehicle less GST is less than AU$30k, we can claim an instant tax write off for the total value (this is a temporary arrangement until 2020). The credit can rollover into subsequent years
  • If the value is more than AU$30k, we can claim 12% of that amount on that tax year, and 30% of the balance every subsequent year. So for example a AU$55k car gives an immediate $5000 GST credit, a $6000 tax write off that year, AU$13200 on year 2, AU$9240 on year 3 and so on.
  • In addition to the above, we can claim running costs using either of 2 methods: 68 cents per km up to a maximum of 5000km, or keeping a logbook where all costs can be claimed.
How does this compare to your country?
 

Stevie The magic Unicorn

Well-Known Member
Greetings fellow ants!

I would like to compare tax regulations on depreciating assets with running costs such as cars, in other countries compared to Australia. Here is a brief on what we have down under:
  • As independent contractors we are registered under an Australian Business Number
  • When a new or used car is purchased for the business we can immediately claim the GST paid as a GST credit. This credit can carry over into subsequent business periods if it is more than the debt
  • If the value of the vehicle less GST is less than AU$30k, we can claim an instant tax write off for the total value (this is a temporary arrangement until 2020). The credit can rollover into subsequent years
  • If the value is more than AU$30k, we can claim 12% of that amount on that tax year, and 30% of the balance every subsequent year. So for example a AU$55k car gives an immediate $5000 GST credit, a $6000 tax write off that year, AU$13200 on year 2, AU$9240 on year 3 and so on.
  • In addition to the above, we can claim running costs using either of 2 methods: 68 cents per km up to a maximum of 5000km, or keeping a logbook where all costs can be claimed.
How does this compare to your country?
In the US we can either claim actual expenses (which are notoriously hard to calculate) or by the mile, at 58c a mile.
 

Stevie The magic Unicorn

Well-Known Member
Is there a limit on how many miles you can claim? What about vehicle depreciation?
There’s no limit.

Yes depreciation can be claimed under “actual expenses”

But not both...



70,000 miles equaled $37,000 in expenses I wrote off in a single year, would be higher now. That’s more than the purchase price of the car.


Once you exceed a certain point actual expenses is next to impossible to be higher than the write-off for miles.


The way the math worked out, over the lifetime of that car I wrote off over $120,000 in expenses.

The entire purchase price of the car, enough for all the fuel I ever bought, and a bit more than all the maintenance/repairs.

Grand total I wrote off more than I ever spent on that car driving it into worthlessness.
 
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