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Equipment and car tax deductions: the advantage of being a business owner

3-minute read

Get familiar with equipment and car tax deductions to help your small business when it comes to tax time. 

 

Key take-outs

  • If you buy tools, equipment or other assets for your business, you may be able to claim a deduction for some or all of the cost.
  • You may also be able to claim the cost of repairs and insurance cover on your tools and equipment and any interest on money you borrowed to buy these items.

 

Running a business can be time-consuming. So when tax time rolls around, it can often feel like a burden rather than a tool you can use to benefit your business. 

 

To help make sure you’re getting the most out of tax time, we’ve compiled a list of common business equipment and car tax deductions, including writing off vehicles and equipment for depreciation. 

 

Take a look and see if your business may be able to benefit from these tax deductions.

Equipment tax deductions

If you buy tools, equipment or other assets for your business, you may be able to claim a deduction for some or all of the cost. 

 

Depreciation deductions could be eligible to be claimed on most types of assets as long as it’s used for your business, including:

  • Computers and software
  • Office furniture including filing cabinets and bookshelves
  • Hand tools, such as spanners, hammers and screwdrivers or power tools, such as grinders, sanders and hammer drills
  • Protective items, such as hard hats, safety glasses, sunglasses, sunscreens and cosmetics containing sun protection
  • Professional libraries
  • Safety equipment
  • Technical instruments
  • Forklifts

 

You may also be able to claim the cost of repairs and insurance cover on your tools and equipment and any interest on money you borrowed to buy these items.

 

Find out more about equipment tax deductions on the ATO website.

 

Car tax deductions

If you use your vehicle exclusively for business, you may be able to deduct the expenses related to owning and using that vehicle. 

 

If you use your vehicle for both business and personal use, you may be able to deduct the portion used for business. You’ll need to keep records to show the business use. That could include keeping a logbook to outline when you used the vehicle for business, how many kilometers you drove and where you drove to and from. 

 

Common car tax deductions include:

  • Fuel and oil
  • Repairs and servicing
  • Interest payments on a vehicle loan
  • Lease payments
  • Insurance premiums
  • Registration
  • Car depreciation (decline in value)

 

Find out more about deductions for motor vehicle expenses on the ATO website.

Claiming depreciation on cars and machinery

Business owners may regularly invest in business assets. This could be new assets or upgrading or replacing existing assets.

 

To support small businesses, the government has provided incentives to allow certain assets like vehicles and equipment to be eligible for instant asset write-off. This means you may be able to claim an immediate tax deduction for the business portion of the cost of the asset. 

 

The instant asset write off is a significant government incentive for you as a business owner, so make sure to discuss the implications of this in relation to your individual situation with your accountant or tax advisor. They’ll also be able to help you make sure your business is correctly claiming all eligible tax deductions.

 

Find out more about instant asset write-off and temporary full expensing

 

Take advantage of government incentives with a business vehicle or equipment loan. Benefits of purchasing business assets and government incentives aside, it’s important to consider costs associated with taking on a business loan to purchase new equipment and interest payments are an example of a cost to consider.

Tax time is around the corner

 

The end of financial year is fast approaching. Now is a good time to get your financials up to date and compile a list of your eligible deductions — including receipts of eligible purchases. It’s also a good time to get prepared with a tax-effective financial strategy - like the instant asset write off - before it’s too late.

 

The benefits of being a business owner can pay off if you take the time to consider your options. So when tax time rolls around each year, use it as a tool to help your business succeed.

 

 

Read more

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Things you should know

This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information to your own circumstances and, if necessary, seek professional advice.

The taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and their interpretation. Customers must seek their own independent tax advice in relation to their individual circumstances.