If you purchase a vehicle to be used for your line of work, you can raise this as a business expense so that you get the income tax relief.
Any motor vehicle asset over $1,000 will be depreciated over 5 years and this will be taken care of for you in the Hnry system (please note that as a response to Covid-19, for the 2020/21 financial year only the depreciation threshold has changed so that only items that cost over $5,000 need to be depreciated (see How does Depreciation work with Hnry?).
When you are raising your motor vehicle as a business expense in Hnry, you will need to use the category “Motor Vehicle Purchase” in the Expenses section of the Hnry App.
- You will need to enter the total value/purchase price of the car as the expense amount, irrespective of whether you are paying for it on finance or not (see "Purchasing a vehicle on finance" section below).
- Select the amount you are claiming from the drop-down menu (defaulted to 25%). NB: If you use the vehicle for both business and personal use, you can automatically claim 25% of the motor vehicle cost. If you wish to claim more than 25%, you will need to keep a logbook for at least three months every three years to demonstrate your business versus personal use. If the vehicle is used solely for business purposes, then you can claim 100% of the cost.
Second hand or Private sale
If you buy a vehicle through a second hand or private sale, you can still raise your vehicle purchase as an expense as long as you have a copy of the purchase agreement, change of ownership papers or a receipt. If you are GST registered then in order to claim the GST on the vehicle, you will need to have a GST receipt.
Purchasing a vehicle on finance
If you buy a vehicle on finance, you should raise the expense for the total value/agreed purchase price of the vehicle, and not the repayment amounts to the Finance company. You will need to provide a copy of the purchase agreement /receipt to confirm the value of the car being paid off. We will then depreciate the car as an asset for you as per a regular Motor Vehicle purchase. The only difference when paying on finance is that you can also claim the interest charges you incur from the Finance company as a business expense (making sure you add these under the Motor Vehicle Purchase category and select the same percentage that you used when claiming the total cost of the car e.g. 25%).
Any costs incurred for travel between home and work are not classified as business use and cannot be claimed.