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Home > Blog > Claiming a tax deduction for motor vehicle and fuel expenses

Claiming a tax deduction for motor vehicle and fuel expenses

Date: 15 July 2022

As a business owner you can claim a tax deduction for expenses for motor vehicles, including fuel. The Government has put together this information for the 2022-23 financial year.

MOTOR VEHICLES

From 1 July 2022, the following car threshold amounts apply for the 2022–23 financial year.

Income tax:

  • The car limit for 2022–23 is $64,741.
  • This is the maximum value that can be used to calculate depreciation on the business use of a car first used or leased in the 2022–23 income year.

Goods and services tax (GST):

  • If you purchase a car and the price is more than the car limit, the maximum GST credit you can claim (except in certain circumstances) is one-eleventh of the car limit, which is $5,885 in 2022–23.
  • You can’t claim a GST credit for any luxury car tax you pay when purchasing a luxury car, regardless of how much you use the vehicle to carry on your business.

Luxury car tax (LCT):

  • $84,916 for fuel-efficient vehicles, in line with an increase in the motor-vehicle purchase sub-group of the Consumer Price Index (CPI).
  • $71,849 for all other luxury vehicles, in line with an increase in the “All Groups” CPI.
  • Remember, the LCT value of a car generally includes the value of parts, accessories or attachments supplied or imported at the same time as the car.

Resources:

Cents per kilometre method

Car cost limits for depreciation

GST and motor vehicles

Luxury care rate and thresholds

When LCT happens

FUEL

If you claim fuel tax credits, you must apply the lower rates for fuel acquired from 30 March 2022.

Each time you complete your BAS, the easiest way to ensure you are using the correct rate is to use the ATO’s fuel tax credit calculator.

The lower fuel tax credits rates result from halving fuel excise for six months, from 30 March to 28 September.

During the temporary rate reduction period, businesses using fuel in heavy vehicles for travelling on public roads won’t be able to claim fuel tax credits. This is because the road user charge exceeds the excise duty paid, which reduces the fuel tax credit rate to nil.

Resources:

Fuel tax credit tools

Rates – Business

Fuel tax credit business records – overview

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