As a business owner, there are tax deductions that you may be eligible for which relate to car and vehicle expenses.
If your business has vehicle expenses, make sure you get the most out of your tax return and claim the deductions that you are entitled to.
Here is an introduction to the kinds of expenses that you may be able to claim, and how to claim them.
Please note: All information is of a general nature and cannot be regarded as personal advice. Rapid Finance suggests that you always consult a tax professional for advice on claiming vehicle expenses on your tax return.
Claiming vehicle tax deductions as a business owner
The deductions that you can make as a business owner will depend on the business structure you operate under, the type of your vehicle you use and whether or not it is also used for private purposes.
Since your business vehicle or vehicles are business assets, you may be able to claim a tax deduction for depreciation of their value from wear and tear. However, if you also use the vehicle for personal use, you can only deduct the cost of depreciation for the percentage of its use that is work related. For example, if you use the vehicle for 60% work purposes, you could claim 60% of the total depreciation amount as a tax deduction. You must also keep track of your usage in a logbook so that you can accurately calculate how much of it is for work purposes.
You should also be aware that if your employees use a business vehicle for their personal use as well as for work, you may have to pay fringe benefits tax.
You may also be able to claim your business car loan payments on your tax return. This will depend on the type of car loan and your individual circumstances. Always consult a tax professional for advice on your potential deductions and liabilities.
Claiming business car loan payments as a tax deduction
In certain circumstances, you may be able to claim costs associated with your business car loan as a tax deduction. This will depend on a range of factors, including the type of business car loan that you have, and the structure of your business.
Business car loans that could be eligible for tax deductions include:
Each of these types of business car loan have different features and benefits. The type of loan you choose may also impact on the type of deductions that you can claim.
Some of the car loan costs that you may be able to claim include:
- GST on the initial purchase price
- GST paid on the interest payments
- Depreciation of vehicle value
For more information about the differences between business car loan types, check out our guide to business car loans.
Make the most of car finance
Business car loans have many potential tax benefits. At Rapid Finance, we are experts in helping our customers get suitable finance solutions for their businesses. Our finance specialists will look at your situation in depth to help you find a business car loan solution that suits your needs.
Could you benefit from a new work car? Learn more about your business car loan options.