Motor Vehicle Cost Limit 2024

Motor Vehicle Cost Limit 2024

When claiming Motor Vehicle deductions using the log book method, you need an understanding of the motor vehicle cost limit. We will explain the 2024 motor vehicle cost limit, its implications for depreciation claims, and potential pitfalls to avoid. Let's keep it straightforward and educational, with examples to clarify our points.

1. What is the Motor Vehicle Cost Limit?

The motor vehicle cost limit sets a cap on the maximum value that can be claimed for depreciation purposes. For the 2024 income year, this limit is set at $68,108. This limit applies whether the car is new or second-hand.

Trap: Attempting to claim depreciation beyond this limit will be disallowed by the ATO.

Example: If you purchase a car for $80,000, you can only claim depreciation up to the $68,108 limit.

2. GST Input Tax Credits

When you purchase a motor vehicle, you may be entitled to claim GST input tax credits. However, these credits are also limited by the motor vehicle cost limit.

Trap: Overestimating your GST input tax credits can lead to adjustments and penalties.

Example: For a car costing $75,000 (GST-inclusive), the GST input tax credit is calculated as $6,191 (1/11 of $68,108). This reduces the car's cost for depreciation purposes to $68,809.

3. Depreciation Claims

The depreciation claim for a motor vehicle is capped at the motor vehicle cost limit. This ensures that high-cost vehicles do not receive disproportionately large tax benefits.

Trap: Failing to apply the cost limit can result in disallowed claims and potential audits.

Example: If a car costs $90,000, the depreciation claim is limited to $68,108, and not the full purchase price.

4. Impact on Leasing

If you lease a motor vehicle, the cost limit also affects the amount you can claim for depreciation and notional interest.

Trap: Incorrectly calculating lease deductions can lead to complications with the ATO.

Example: For a leased car costing $85,000, the depreciation claim is capped at $68,108, and you can claim notional interest on the lease payments based on this limit.

5. Record Keeping

Maintaining accurate records is crucial when claiming motor vehicle expenses. This includes purchase invoices, logbooks for business use, and receipts for any related expenses.

Trap: Poor record-keeping can result in denied claims and ATO penalties.

Example: Keep a detailed logbook to substantiate claims for business use of your vehicle.

Gotax Deduction Grabber App

To make tracking these deductions easier, download the Gotax Deduction Grabber App. It has all the log books and tax expense recording systems you need. Scan the QR code to download and simplify your tax filing process.  

Gotax Tax Advice

Remember, the key to maximising your refund is diligent record-keeping and understanding what you can and can't claim. When in doubt, consult a tax professional to ensure you're getting the most out of your deductions.

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