There’s a limit on the cost you can use to work out the depreciation of passenger vehicles (except motorcycles or similar vehicles) designed to carry a load of less than one tonne and fewer than 9 passengers.
The maximum value you can use for calculating your depreciation claim is the car limit in the year in which you first used or leased the car.
The agreed price of any trade-in does not reduce the cost of your newly acquired car.
You can’t claim the excess cost over the car limit under any other depreciation rules.
The car limit amount may increase from year to year. It’s important to check for the latest amount if you are calculating the depreciating deduction you can claim for a car. This can be found at ato.gov.au.
For example, the car limit amount for the 2023–24 income year is $68,108.
In July 2023, you buy a car for $75,000 (including GST) to use in running your business, which is not registered for GST. The car limit applies to the car.
When working out the car's decline in value for the 2023–24 income year, reduce the first element of the cost of the car to the car limit amount of $68,108.
