The following car thresholds will apply for the 2024–25 financial year
Income Tax
The car limit for 2024–25 is set at $69,674. This represents the maximum value that can be used to calculate depreciation on a car if:
The vehicle is used for business purposes.
The vehicle is first used or leased during the 2024–25 income year.
As a business owner, you are eligible to claim tax deductions for motor vehicle expenses incurred in the course of business operations.
If a motor vehicle is used for both business and personal purposes, deductions can only be claimed for the business-related portion. You must be able to substantiate the business usage percentage with appropriate records.
Goods and Services Tax (GST)
If you purchase a car that exceeds the car limit, the maximum GST credit you can claim (with certain exceptions) is one-eleventh of the car limit. For the 2024–25 financial year, this maximum is $6,334 (i.e., 1/11 × $69,674).
GST credits cannot be claimed for any luxury car tax (LCT) paid when purchasing a luxury vehicle, even if the car is used for business purposes.
Luxury Car Tax (LCT)
The LCT thresholds for 2024–25 are as follows:
$91,387 for fuel-efficient vehicles, adjusted in accordance with increases in the motor-vehicle purchase sub-group of the Consumer Price Index (CPI).
$80,567 for all other luxury vehicles, in line with the general 'All Groups' CPI increase.
If you are considering purchasing a luxury vehicle, be cautious of third parties offering to purchase the vehicle on your behalf at a discount. Such schemes may involve attempts to avoid LCT and could expose you to risks, including insufficient insurance coverage or issues with the vehicle being damaged or defective.
For further details about LCT, including when it applies and what is included in the LCT value of a vehicle, visit the Luxury Car Tax page on the ATO's website.
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