Suitable for: Anyone who has assets such as cars who are looking to depreciate the costs

Tax Difficulty: Beginner

Airtax Experience: Anyone

Time to read: 1-2 minutes

What you need to know about simplified depreciation

You can claim an immediate deduction for a percentage of the price of the car (excluding GST). This should represent the proportion that you use the car for earning income (as opposed to personal use). The proportion of time that you use the car for earning income is called the 'taxable purpose proportion'. This ability to 'write off' assets applies for income producing assets with a cost price of less than $20,000.

Example: 
James purchased a new car on 1 July 2022 for $18,000 (excl. GST). 50% of his use of the car is for a taxable purpose (e.g. ride sharing). James is therefore entitled to write off the asset by claiming an immediate deduction of $9,000. This represents the taxable purpose proportion of the cost price of the car.

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This document merely provides a broad outline of the subject and is necessarily general in nature.  If you require specific advice, which is tailored to your specific circumstances, please do not hesitate to contact us (fees would apply).