Do I upgrade my car?
Lets face it, everyone loves a new car, but is it time to upgrade or should you wait?
There are so many considerations
Current car
-condition
-age
-km
-body damage
-reliability
New car
-improved safety
-improved efficiency
-improved features
-cost & financing
Other factors include
-image
Assuming you have made the decision to purchase a new car you will need to decide how to finance it
-car dealership finance
-home loan
-personal loan
-buy outright
Most people use car dealership finance as they
-have competitive interest rates
-are convenient
-have simple applications
Electric / Hybrid cars
The jury is out
-price
-life of the vehicle
-infrastructure
Car Allowance
They are normally untaxed because the deduction claimed is greated than the allowance
Novated Lease
Packaged into your salary (including fringe benefits)
When you leave employment you take the car with you (and loan obligations)
Claiming a tax deduction
Option 1 - cents per km
max 5,000 work km
rate is $0.85 per km (2023-24 tax year)
Option 2 - log book method (link)
actual expenses x work use %
Depreciation limits apply
2024 $68,108
2025 $69,674 (ATO link)
Scenario 1
Current car is 7 years old
175,000km on the odometer
Out of warranty
Recommendation = Yes buy a new car (assuming you can afford it)
-reliability concerns
-improved safety
-improved efficiency
-fully depreciated
The Numbers
Assumptions
-car (see motor vehicles)
-80% work use per log book (see log book rules)
| Purchase price | $68,000 | |||||||
| Purchase date | 15/08/2024 | |||||||
| Yr1 | Yr2 | Yr3 | Yr4 | Yr5 | Yr6 | Yr7 | Yr8 | |
| 30/06/2025 | 30/06/2026 | 30/06/2027 | 30/06/2028 | 30/06/2029 | 30/06/2030 | 30/0/2031 | 30/06/2032 | |
| Depreciation (80% work use) | 11,923 | 10,619 | 7,964 | 5,973 | 4,480 | 3,360 | 2,520 | 1,890 |
| Fuel ($100/wk) | 5,200 | 5,200 | 5,200 | 5,200 | 5,200 | 5,200 | 5,200 | 5,200 |
| Rego | 850 | 850 | 850 | 850 | 850 | 850 | 850 | 850 |
| Insurance | 1,500 | 1,500 | 1,500 | 1,500 | 1,500 | 1,500 | 1,500 | 1,500 |
| Repairs & Service | 600 | 600 | 600 | 600 | 600 | 600 | 600 | 600 |
| Tyres | 600 | 600 | 600 | 600 | 600 | 600 | 600 | 600 |
| Total Deduction (D1) | 20,673 | 19,369 | 16,714 | 14,723 | 13,230 | 12,110 | 11,270 | 10,640 |