Buying a Motor Vehicle - Sole Traders

There are different Tax & GST treatments depending on the type of motor vehicle you buy

Cars

These are motor vehicles which are designed to carry both:
-a load less than one tonne
-fewer than 9 passengers

Examples: sedan, SUV

Other Vehicles

These are vehicles which ARE NOT designed principally to carry passengers
Examples: van, single cab ute

Depreciation limits DO NOT apply

Some vehicles i.e. dual cab utes can be either a Car or Other Vehicle so the specifications need to be reviewed

If unsure as to what type of vehicle you are buying speak to your accountant BEFORE buying it
 

Tax

Motor Vehicles (not designed principally to carry passengers)

Depreciation deduction limits DO NOT apply

Under $20,000 (purchased between 01/07/2023 - 30/06/2025)

If your sole trader business (small business entity) buys a motor vehicle for less than $20,000 (net of GST) then the business use portion * is fully deductible when purchased

The vehicle must be delived by 30 June if you want to claim the deduction in that particular tax year

* To determine the business use portion we recommend you preare a log book

Over $20,000 (purchased between 01/07/2023 - 30/06/2025)

If your sole trader business (small business entity) buys a motor vehicle for more than $20,000 (net of GST) then the business use portion * is added to the general asset pool and depreciated at 15% in year 1, then 30% in year 2 onwards

The vehicle must be delived by 30 June if you want to claim the deduction in that particular tax year

* To determine the business use portion we recommend you preare a log book


Cars (designed principally to carry passengers)

Depreciation deduction limits DO apply

Under $20,000 (purchased between 01/07/2023 - 30/06/2025)

If your sole trader business (small business entity) buys a car for less than $20,000 (net of GST) then the business use portion * is fully deductible when purchased

The vehicle must be delived by 30 June if you want to claim the deduction in that particular tax year

* To determine the business use portion you MUST preare a log book

Over $20,000 (purchased between 01/07/2023 - 30/06/2025)

If your sole trader business (small business entity) buys a car for more than $20,000 (net of GST) then the business use portion * is added to the general asset pool and depreciated at 15% in year 1, then 30% in year 2 onwards

Note that depreciation limits apply (see below) in that there is a maximum than can be added to the general asset pool - the remainder is not tax deductible

The vehicle must be delived by 30 June if you want to claim the deduction in that particular tax year

* To determine the business use portion you MUST preare a log book

 

GST

Motor Vehicles (not designed principally to carry passengers)

GST limits DO NOT apply

If your sole trader business (small business entity) pays GST as part of a motor vehicle purchase then the business use portion * of the GST is fully claimable

When GST is claimable depends on whether you are registered on a cash or accrual basis and how it is financed

* To determine the business use portion we recommend you preare a log book


Cars (designed principally to carry passengers)

GST limits DO apply

If your sole trader business (small business entity) pays GST as part of a motor vehicle purchase then the business use portion * of the GST is fully claimable subject to the GST limit (see below)

When GST is claimable depends on whether you are registered on a cash or accrual basis and how it is financed

* To determine the business use portion you MUST preare a log book

Depreciation limits

2024 $68,108
2025 $69,674 (ATO link)

GST limits

2024 $6,191
2025 $6,334 (ATO link)