How Australians can get a cash back on their tax return by buying a new car or ute – here are all the expenses you can claim

A self-employed person can deduct the cost of a heavy-duty SUV on their taxes, regardless of its cost.

A conventional car worth up to $68,108 can be declared taxable.

But if a van is needed for work, there are no cost limits and many popular cargo vehicles now cost six figures.

This is good news for traders, farmers and business owners who buy a vehicle to make a living.

Someone who purchases a vehicle for work purposes can claim the expense on eight years of tax returns, regardless of how big or small the business is.

Small and medium-sized businesses with a turnover of up to $10 million can also claim work-related assets worth up to $20,000 in a tax year under the “instant asset write-off” scheme.

With just a few days left until the end of the financial year, here’s how to claim some important tax items.

Claiming high-value items on tax potentially reduces a person’s taxable income so they can maximize their refund.

Utes

There are no price limits when buying a ute, as long as it carries more than a tonne and is not designed to carry passengers.

That means a new $75,600 Toyota LandCruiser 70 Series pickup truck with only two seats can be deducted from someone’s taxable income.

This popular workhorse carries 1.3 tonnes on the tray and can tow 3.5 tonnes.

Late-model second-hand LandCruisers commonly sell for more than $100,000, given the long waiting list for a new ute.

Mark Chapman, director of tax communications for H&R Block, said a business owner who needed to transport heavy loads had more options when it came to claiming a pickup truck on taxes.

“Certain large, expensive, base-heavy vans are not affected by the expensive car limit and can instead be depreciated from the entire purchase price,” he told Daily Mail Australia.

‘If the ute is classed as a commercial vehicle, meaning it is designed to carry a load of more than one tonne and is not primarily designed to carry passengers, the full cost can be claimed, regardless of the cost.’

Cars

Vehicles carrying up to nine passengers with a load capacity of less than one ton are classed as cars, and a business owner can claim one worth up to $68,108.

“They can claim depreciation over the life of the vehicle,” Chapman said.

‘This depreciation can only be claimed up to the expensive vehicle limit of $68,108 for automobiles.’

Regardless of the type of vehicle, the Australian Taxation Office considers cars to have an eight-year useful life, meaning the cost must be amortized over eight years of tax returns.

Instant asset write-off

Carpenters and plumbers buying tools, farmers buying machinery or pizzeria owners buying a cheap delivery car can also claim individual items worth up to $20,000 as part of the instant asset write-off.

This is where the full cost in one financial year can be claimed in the next tax return for 2023-24, rather than having to depreciate the expense over several years of tax returns.

But this relief is only available to small businesses with a turnover of less than $10 million a year, under an aid program that debuted in 2015.

“This is great for technology items like computers, tablets and phones, as well as tools and trade equipment and office furniture,” Chapman said.

But items must be in use by June 30, and not simply purchased before the end of this financial year.

“If you order and pay for an asset between now and June 30 but it is not delivered until July, you will have to wait until next year to claim,” he said.

“Therefore, in effect, the item must be delivered, configured and available for use to qualify.”

The current $20,000 threshold for instant asset write-off will be in effect until June 2025, after temporarily increasing to $150,000 between October 2020 and June 2023, covering part of the pandemic.