MIL-OSI Australia: Changes to car thresholds from 1 July

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Source: Australian Department of Revenue

The following car threshold amounts will apply for the 2024–25 financial year.

  • The car limit for 2024–25 is $69,674. This is the highest value you can use to calculate depreciation on a car where both of the following apply:
    • you use the car for business purposes
    • you first use or lease the car in the 2024–25 income year.
  • As a business owner, you can claim a tax deduction for expenses for motor vehicles you use for business purposes.
  • If you use a motor vehicle for both business and private purposes, you can only claim a deduction for the business part. You must be able to show the percentage you claim as business use and have records to support your claim.

Goods and services tax (GST)

  • If you buy a car and the price is more than the car limit, the maximum GST credit you can claim (except in certain circumstances) is one-eleventh of the car limit. For the 2024–25 income year, the maximum GST credit you can claim is $6,334 (that is, 1/11 × $69,674).
  • You can’t claim a GST credit for any luxury car tax you pay when you buy a luxury car, even if you use it for business purposes.

Luxury car tax (LCT)

  • The LCT threshold for 2024–25 is:
    • $91,387 for fuel-efficient vehicles. This is in line with an increase to the motor-vehicle purchase sub-group of the Consumer Price Index (CPI)
    • $80,567 for all other luxury vehicles, in line with an increase in the ‘All Groups’ CPI.

If you’re looking to buy a luxury car, remember to be cautious of those who offer to buy one from a dealer on your behalf at a discount. This may be a scheme to evade LCT. You may be at risk if they don’t have the right insurance or if the car is damaged or defective.

To find out more about LCT, including when you need to apply it and what’s included in the LCT value of a car, visit the Luxury car tax page on our website.

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