Contemplating purchasing a new or second hand business vehicle?
Purchasing a new or second hand business vehicle? Temporary full expensing is available if purchasing eligible depreciating business assets up until 30 June 2022 – in other words, the business will be able to claim an immediate full deduction for the full cost of purchasing rather than claim depreciation on a pro-rata basis over future years.
If the cash is not readily available, a chattel mortgage or equipment loan to finance the purchasing of the vehicle will enable you to claim the outright full cost deduction as well as, if registered for goods and services tax, claiming the GST credits up front! Furthermore, interest on the loan repayments will be deductible, as well as the business use operating costs of fuel, registration, insurance etc.
On a cautionary note, hire purchase of any new vehicle will not qualify the business for “purchase” cost deduction as hire purchase does not transfer ownership of the vehicle until the hire purchase agreement concludes, and when usually, an option to purchase is exercised.
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Photo credit: James Dimas