The Federal Government has been asked to urgently clarify whether or not its new $150,000 instant asset tax write-off limit can be applied to cars.
The changes, introduced as part of the government's coronavirus stimulus package, mean businesses can claim assets purchased up to the value of $150,000 as a work expense in this financial year rather than over several years.
However, under the current guidelines set out by Treasury and the Australian Tax Office (ATO), the limit for motor vehicles is $57,581, about one-third of the new proposed limit of $150,000.
The Australian Automotive Dealers Association (AADA) has written to Federal Treasurer Josh Frydenberg “seeking urgent advice” because of contradictions in the guidelines.
“We have welcomed the expanded instant asset write off but are seeking urgent advice from Treasury and the ATO as to whether the current car limit would apply,” wrote AADA CEO James Voortman.
“If it does apply, only cars under $57,581 would qualify rather than those under $150,000. Dealers need this information urgently as they need to advise businesses seeking to purchase vehicles.”
The AADA says restricting the new stimulus package to the current car limit of $57,581 will “exclude a range of commercial vehicles for tradesmen, farmers and other businesses, such as tour companies and limousine providers”.
“It will also discourage the fitment of accessories as it may push (buyers) over the limit,” wrote Mr Voortman. “The AADA urges the Government to allow businesses to instantly depreciate vehicles under the $150,000 threshold.”
Mr Voortman added: “Dealers are grateful for stimulatory measures given the sale of new cars have been contracting for 23 months in a row. We need to breathe life into this industry, and dealers believe that businesses should be able to instantly depreciate vehicles under the $150,000 threshold.”
However, Mr Voortman said: “We need to know which cars are eligible under this measure. Is it cars under $150,000 or cars under $57,581?”
The AADA says dealers need to know because customers are already asking how the rules apply.
“Dealers need to be in a position to advise their customers as they will try and promote these measures in the coming months,” said Mr Voortman.
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