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As you would know the instant asset write off threshold of $150,000 is coming to an end on 30 June 2023 returning to its original value of $1,000. With the recent shortages to stock of motor vehicles in Australia and massive waiting times for the delivery of your new vehicle, it might be time to consider heading into a dealership and placing an order sooner rather than later to ensure your vehicle is delivered and ready to use before 30 June 2023.
As you might know some vehicles have a huge waiting list of 6 months and over, however, each dealership have their own timeframes so it would be best to have a chat directly with them. Please note that you are unable to claim a deduction for the asset unless it has been delivered and is ready to be used prior to 30 June 2023.
Example 1: Purchase of a motor vehicle with a capacity of more than one tonne but less than 9 passengers – the effect of the car limit for depreciation
Matt purchased a new vehicle for $70,000 to transport goods for his business. The vehicle is used 100% for business purposes. He purchased the vehicle on 1 October 2022 and received the vehicle ready for use on 3 January 2023.
The payload capacity of the vehicle is 1065 kg. The vehicle carries less than 9 passengers. The car limit does not apply as the vehicle has a payload capacity of more than one tonne.
Matt can claim the full cost ($70,000) of the vehicle under the instant asset write-off in the 2022–23 income year because:
- the vehicle is less than the $150,000 threshold
- he is eligible to claim temporary full expensing as the vehicle is purchased after 6 October 2020
- the car limit does not apply (as the vehicle has a payload capacity of more than one tonne)
- the vehicle is only used for business purposes.
Example 2: Asset purchased but not ready for use
Leslie is a florist and has an aggregated turnover of less than $10 million. Her business requires a new van to help expand her deliveries.
Leslie purchases a van for $22,500, which was paid for on 6 June 2023. Under the terms of the contract, delivery of the van is made on 25 June 2023 which is also when the van is ready for use. At that time, the instant asset write-off threshold was $150,000 and Leslie claims the entire cost of the van in her 2023 tax return.
If the van had been delivered after 30 June 2023 and Leslie started to use it at the time of delivery, Leslie would not have been able to write-off the entire cost of the van. This is because the cost of the van exceeded the threshold applicable at that time of $1,000. Leslie would instead add the van’s cost of $22,500 to her florist small business depreciation.
Author
Natasa Briffa