Claiming depreciation on a car in Australia can be a bit like trying to squeeze blood from a stone, but it’s doable if you’re using the vehicle for business purposes. Essentially, you can treat the car as a business asset and claim a tax deduction for its decline in value over time. The Australian Taxation Office (ATO) allows depreciation using either the prime cost method or the diminishing value method.
Prime cost method: spreads the depreciation evenly across the asset’s effective life.
Diminishing value method: claims more depreciation early on, tapering off as the car ages.
Keep in mind, the car must be used for income-producing activities, and you’ll need to keep detailed records of business versus private use. Also, luxury car depreciation caps apply, limiting how much you can claim annually. For accurate figures and to make your accountant smile, check the official ATO guidelines or consult ServiceCentral.
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