Instant asset write-off for cars

Business-related vehicle purchases up to $150,000 qualify for an instant asset tax write-off.

We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!

The instant asset write off on a vehicle first ready for use or first used between 12 March 2020 and 30 June 2021 has been raised to $150,000, provided the vehicle was bought by 31 December 2020.

However, from 1 January 2021, the instant asset write-off will be reduced to $1,000.

As a small business owner, if you've bought a vehicle that will be first used or ready for use from 1 January 2021, it will be allocated to the small business pool.

This law was changed in response to the coronavirus pandemic, and is an attempt to stimulate the economy in a difficult time for business. Originally the increased asset write-off was intended to revert to a lower figure on 30 June 2020, but on 9 June 2020, the government announced it will extend the $150,000 instant asset write-off until 31 December 2020. Previously to this, the instant asset tax write-off was raised to $30,000 on 2 April 2019. Depending on when you have bought, or are going to buy a vehicle for business purposes, will affect the amount that you can write-off in your next tax return.



The benefits aren't limited to just buying a car. You can also claim tax breaks on various other business-related purchases as long as they don’t exceed the newly prescribed threshold.

What is the Instant Asset Tax Write-Off?

As part of a 2019 Federal Budget ruling, small business owners can continue to claim tax breaks on purchases up to $150,000 (net of GST) for vehicles purchased after 12 March 2020 and before 31 December 2020. For vehicles purchased before 12 March 2020 (but after 2 April 2019) the instant asset tax write-off threshold is $30,000.

This ruling applies to businesses with annual turnovers of less than $500 million for vehicles purchased after 12 March, and for vehicles purchased before, an annual turnover of less than $50 million. Businesses can claim tax deductions on any number of sub-$150,000 or sub-$30,000 purchases they make from the legislative passing of the law on 2 April 2019 (for $30,000) or the 12 March 2020 (for $150,000) to 31 December 2020. As of 1 January 2021, the threshold will revert to $1,000.

To qualify for the $150,000 instant asset tax write-off, businesses must have an annual turnover of less than $500 million. For the $30,000 instant asset tax-write off, businesses must have an annual turnover of less than $50 million.

Are you in a small business? Here’s how the $150,000 instant asset tax write-off works.

Here’s what small business owners need to know about how this tax break works.
  • Apart from having a turnover of less than $500 million/$50 million your business should be able to demonstrate activity through quarterly business activity statements and it should be trading actively.
  • Purchases of less than $150,000 or $30,000 now become instantly tax deductible, meaning you don’t have to claim these purchases as deductions over a span of several years.
  • Some of the purchases that qualify for this tax break include equipment, machinery, furniture, tools, vehicles and just about any asset involved in running your business.
  • Non-deductible items include plants, inventory/stock and in-house developed software.

The Small Business Pool

While purchases that exceed this threshold don’t qualify for instant write-offs, you can still expect to write them off over a prolonged period. You allocate assets more than the threshold in value to a General Small Business Pool and work on their depreciation at the same rate.

For the first year, depreciation is 15%, and it becomes 30% in the following years. If, before 31 December 2020, the value of this pool falls under $30,000, you can look forward to its immediate deduction as well. How precisely the small business pool works in regards to the $150,000 instant asset tax write-off is at the moment unclear, so it's a good idea to contact your accountant, or the ATO directly on the matter.

Business lenders you can compare

Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Heritage Bank Fully Drawn Business Loan
$20,000
No maximum amount
1 to 25 years
Application fee is available upon application
Get access to a loan from $20,000 with no maximum limit with Heritage Bank. Loans can be secured by residential and non-residential property and have terms of up to 25 years.
Swoop Finance Business Loan
$1,000
$100,000,000
1 to 20 years
Depending on your loan contract
Apply online and borrow between $1,000 and $100,000,000. Options for good and bad credit borrowers.
Zip Business Loan
$10,000
$500,000
6 months to 3 years
No establishment fee
Borrow up to $500,000 with loan terms of up to 3 years. Flexible weekly, fortnightly and monthly repayment options available with no early repayment fees.
Moula Business Loan
$5,000
$250,000
1 to 2 years
2% Establishment fee
A loan of up to $250,000 that can be approved and funded within 24 hours. Available to businesses with 6+ months operating history and $5,000+ monthly sales.
Lumi Unsecured Business Loan
$5,000
$300,000
3 months to 3 years
2.5% establishment fee
Apply for up to $300,000 from Lumi and benefit from short loan terms, no early repayment fees and once approved receive your funds in just one business day.
ebroker Business Loan
$5,000
$5,000,000
1 month to 30 years
$0 application fee
Small business loans available between $5,000 and $5,000,000. Get access to 70+ non-bank lenders on this independent platform.
Max Funding Unsecured Business Loan
$3,000
$30,000
1 month to 1 year
$0 application fee
An unsecured business loan from $3,000 that offers convenient pre-approval and no early repayment fees.
Valiant Finance Business Loan Broker
$5,000
$1,000,000
3 months to 5 years
$0 application fee
A Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 70 lenders. Loans between $5,000 and $1 million are available. Request a call – your loan can be funded in 1 business day.
OnDeck Business Loans
$10,000
$250,000
6 months to 2 years
3% of loan amount
Apply for up to $250,000 and receive your approved funds in one business day. Minimum annual turnover of $100,000 and 1 year of trading history required.
Octet Trade Finance
$100,000
$7,000,000
1 month to 2 years
Transaction fee 2.5%
Access a line of credit to pay suppliers in over 65 countries. Borrow from $200,000 up to $7 million.
Prospa Business Loan
$5,000
$300,000
3 months to 3 years
3% origination fee
Small business loans are available from $5,000 - $300,000 on terms of up to 3 years. At least six months trading history and a monthly turnover from $6,000 is necessary.
ANZ Secured Business Loan
$10,000
$10,000,000
Up to 15 years
$600
Benefit from a low rate when you secure this loan with property and/or business assets. Loans from $10,000 available.
Westpac Business Loan
$20,000
$1,000,000
1 to 30 years
$0 application fee
Purchase a new vehicle, equipment or support your cash flow with a business finance solution from Westpac.
Capify Unsecured Business Loan
$5,000
$300,000
3 to 13 months
3% origination fee
An unsecured business loan up to $300,000 for eligible businesses. Businesses operating for a minimum of 6 months and having turnover of at least $10,000 a month can apply.
loading

Compare up to 4 providers

How we can help you pick a business vehicle

There are dozens of car brands and hundreds of unique models to choose from, in varying body styles. Throw into the mix the normally multiple engine capacities and fuel type variants, as well as the need to pick a transmission (and trim grade) - then narrowing down your shortlist to just one or two vehicles can seem overwhelming.

Which business vehicle should I buy?

Let us help you pick the right vehicle for your business

We compare four or five expert car reviews, condensing them into one, easy to digest overview. We also compare the scores given to vehicles, to help you better gauge how good a model truly is. We try to cut the usual automotive jargon to help save you time and frustration.

We also collect together some of the best car deals, saving you money and making your budget stretch further. And if you're looking for car loans and a vehicle financing guide, we've got you covered there too.

So, how does this work when it comes to buying a car?

While businesses can consider buying used vehicles, know that you can even get a micro car, a light car, an entry-level small car or a base grade van for less than the threshold specific to your time of purchase. It should be expected that car dealerships will give you plenty of opportunities to take full advantage of the tax break by offering car deals for less than $150,000 after 12 March 2020 or $30,000 after 2 April 2019. What also helps is that this tax break applies even if you plan to buy a car using finance.

What percentage is the car to be used for business purposes?

How much you can write off in tax will depend on how much of the car will be used for business purposes. If the car is 50% for business purposes and 50% for personal use, you will only be allowed to write off 50% of the value of the car (as long as the car is under $150,000 or $30,000).

For example, if you purchase a car for $25,000 that's 50% for business purposes, you can write off $12,500 immediately in your 2019 tax return. If the same car was for 75% business purposes, you could write off $18,250 of the car's value.

However, if you purchase a car for over $150,000 after 12 March 2020 or $30,000 before 12 March 2020, the car would not qualify for the instant asset tax write-off. This is true even if the percentage of the car's value that you can claim is under the threshold. Vehicles with a value over the threshold must be added to the Small Business Pool.

What vehicle should I buy for my business?

Struggling to understand which vehicle to buy? Here's a quick primer to help make the decision process easier.

Vehicle typeBudgetReviewsTop ratedGood for
Ute$19,990-$144,350Ford Ranger and VW Amarok - 85%
  • General all-rounder
  • Towing
  • Carrying loads (especially messy ones)
  • Customising (fitting a tray, off-road equipment, tool holders e.t.c)
  • Off-road capability
  • Dual use
Small van$25,490-$33,540VW Caddy or Renault Kangoo
  • Great for inner-city delivery routes
  • Fuel economy
  • Cheaper than a larger van
  • Easy to drive
  • Small electric vans available
Van$31,659-$80,075Toyota HiAce - 87.5%
  • Large, secure, dry load area
  • Different seating configurations
  • Roof length for ladders and pipes
  • Payload capacity
  • Professional appearance
Truck$37,400-$350,000+
  • Heavy duty
  • Massive towing capacity
  • Huge payload capacity
  • Aftermarket customisation for specialist applications
  • Different sizes and styles suited to a variety uses
Car$13,990-$1,000,000+
  • Versatile
  • Loads of options
  • EV models available
  • Most comfortable for long distance journeys
  • Ideal for small item deliveries like takeaways or specialist equipment
  • Certain industries need a performance car for branding reasons
  • Fuel economy

What else can you claim in tax for the vehicle?

Please note that for a sole trader or a partnership, a logbook is required. For a company or trust, a Fringe Benefit may arise.

  • You can claim up to 68 cents per kilometre travelled for business purposes.
  • If you purchase the car, you can claim the expenses incurred in running the car to the extent it was for business use.
  • For cars that aren't instantly written off, the vehicle depreciates in value, and you can claim this cost annually as part of the car's expenses.
  • You can claim the cost of insurance, loan interest, fuel, servicing and repairs as operating costs.
  • If you’re leasing a vehicle, you can deduct the lease payments from your business’s taxable income. Again, if you lease the car, you are not purchasing it until the final payment, so the lease cost forms part of the running expenses. This is not to be confused with a "Hire Purchase" arrangement where you buy the car and can claim interest on the loan as part of the running costs.

Finance your new car purchase

What other benefits are on offer?

You don’t have to use this tax break just to buy a vehicle. You can also make use of it in various other ways.
  • If you own a restaurant, you can buy new furniture, kitchen equipment and even uniforms for your staff. Keep in mind that you can claim uniforms elsewhere depending on certain conditions
  • As a tradesperson, you can think about buying new tools or even a computer
  • Small scale industries can consider buying machinery

This tax break is not the only piece of good news for small business owners. Incorporated businesses with turnovers of less than ten million dollars now pay a lower tax rate of 28.5% as opposed to 30%. If you run an unincorporated business, such as a partnership or as a sole trader, you stand to get a 5% discount from 1 July 2015, not exceeding $1,000 per year.


If you qualify for the instant asset tax write-off, now could be the perfect time to buy a car for your business.

DISCLAIMER: Many of the comments in this article are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information applicability to their own particular circumstances.

Picture: Shutterstock

More guides on Finder

Car Loan Offers

Important Information*
Logo for IMB New Car Loan
IMB New Car Loan

You'll receive a fixed rate of 4.99% p.a.
A low minimum borrowing amount of $2,000 that you can use to purchase a new car or one up to two years old.

Logo for Beyond Bank Low Rate Car Loan "Special Offer"
Beyond Bank Low Rate Car Loan "Special Offer"

You'll receive a fixed rate of 4.69% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.

Logo for RACV New Car Loans
RACV New Car Loans

You'll receive a fixed rate from 4.99% p.a.
A larger loan of $5,000 or more to help you buy a new or used car. 5-hour pre approval available and no ongoing fees.

Logo for NRMA New Car Loan
NRMA New Car Loan

You'll receive a fixed rate of 4.99% p.a.
Purchase a new or used car up to 2 years old and benefit from a fixed rate and no monthly fees. Pre-approval available within 5 business hours.

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.

21 Responses

    Default Gravatar
    carolynOctober 6, 2018

    My business is a car-body service in Victoria. (panel beater)
    I’ve bought 2nd-hand tools & equipments for business operating, which cost approximately around 25-30k.
    How can I claim back in this Government tax break?

      Avatarfinder Customer Care
      MayOctober 8, 2018Staff

      Hi Carolyn,

      Thanks for your question.

      Looks like the tax break will only be applicable and can be claimed if you are planning to buy a vehicle/car for your business. If you buy the vehicle you can claim the expenses incurred in running the car to the extent of business use. This was explained in the above as to how claiming the government tax break works. Nevertheless, since you’re running a business, the tools and equipment you bought for operating the business will also have tax deductions. You can get more explanation about claiming deductions from ATO.

      I suggest that you speak to a tax specialist for the process and smooth claiming for a deduction for some or all of the cost you incurred in your tools and equipment. Alternatively, you can contact ATO directly for specifics.

      Hope this helps.

      Cheers,
      May

    Default Gravatar
    TerenceApril 18, 2018

    My car finance is about to run out and I will have a balloon payment of $24,000. I use the car for business and have an ABN. If I were to make additional repayments so that my final balloon payment is less than $20,000, and if I were to refinance this amount, can I claim this immediately, or is it not treated as a new purchase?

      Avatarfinder Customer Care
      MayApril 19, 2018Staff

      Hi Terence,

      Thanks for getting in touch.

      With car loan refinancing, you’d be switching to a different lender that will offer you a lower interest rate and help you manage your balloon payment. Although this is not a new purchase you’ll be going through an application again and meet the lender’s criteria to get approved. Please refer to our guide on refinancing balloon payment to know how you can refinance your existing car loan.

      Cheers,
      May

    Default Gravatar
    EddieFebruary 20, 2018

    Hi, I work as a courier and use my van every day. I do have an ABN. I am still paying my car loan. My accountant lodge the tax return for me and he said the car loan can’t be claimed for tax deductions. Only the interest on the car loan can be claimed. Is this right? Please help me to make this clear as I need to change to
    a new van. What is the max amount I can claim?
    Your early reply will be much appreciated. Thank you.

      Avatarfinder Customer Care
      RonFebruary 23, 2018Staff

      Hello Eddie,

      Good day! Appreciate you contacting Finder regarding your inquiry today.

      In regards to your inquiry about claims on car loan, yes that is correct, you cannot claim on the loan itself. However, you can file claims for interests and other applicable car expenses though since you mentioned that you use the van for business purposes as a courier. For more information regarding when and when you can’t claim car expenses, you may refer to ATO’s car expenses guide.

      We are unable to provide you with a max amount as we are not tax experts ourselves and cannot provide random figures as we have no particular basis to compute from. It would be best for you to refer to the page I gave you for the car expenses you can claim, then you can work closely with your accountant so you won’t miss out on anything.

      Furthermore, the same rule applies when you buy a new van. So long as it will be used for business purposes, you may be able to claim tax benefits for interests and applicable car expenses.

      Hope this helps!

      All the best,

      Ron

    Default Gravatar
    GregJuly 27, 2017

    I’m looking to buy a new ute ,l have half the money to put down and borrow the rest or redraw from my mortgage but some people think l get better tax benefits as a sole trader by borrowing the money,can you give me some knowledge of this please

      Default Gravatar
      JonathanAugust 4, 2017

      Hello Greg,

      Thank you for your inquiry.

      Doing a redraw from your existing home loan may cause some fees and minimum withdrawal amount aside from putting you in a backward on paying off your mortgage faster. On the other hand, Taxation Ruling IT 2582 states that the interest incurred on money borrowed will be deductible provided that the taxpayer is carrying on a business and, in connection with the carrying on of that business, the taxpayer borrows money to pay income tax. However, this may put you in a bigger debt over the long-run.

      You may consider a chattel mortgage as one of your options. You can talk with your tax accountant or financial adviser to weigh your overall financial resources and goals for this decision.

      Hope this helps.

      Cheers,
      Jonathan

    Default Gravatar
    MarcelaJuly 10, 2017

    Hi, I work for a furniture company and I need to buy a car that I can use for work and visiting clients.
    Is there any tax deduction for this cases? I also have an ABN but I wouldn’t be using the car for my business at the beginning but I will in a year or so. Hope you can help me with some information!
    Thanks!

      Default Gravatar
      JonathanJuly 12, 2017

      Hello Marcela!

      Thanks for the inquiry! :)

      You may be able to claim this as tax-deductible depending on certain conditions. As someone who has an ABN, this could be counted towards your business expenses or fringe benefit if you’re a sole trader.

      Take note that since you’ll be filing this at another time, about the depreciation value.

      You may talk to a tax agent for further advice or seek clarification from your local tax office.

      Hope this helps.

      Cheers,
      Jonathan

Go to site