Assets and Exclusions
For the 2023–24 income year, the Australian Tax Office (ATO) has set the maximum value for calculating depreciation on the business use of a car at $68,108.
This cap applies to passenger vehicles (excluding motorcycles or similar vehicles) designed to carry less than one tonne and fewer than nine passengers.
When calculating depreciation, the car limit is used as the maximum allowable claim, regardless of the price paid for any trade-in during the year the car was first used or leased.
Car Limit Values by Income Year
The table below summarises the car limits and the indexation factors for recent income years:
| Financial year | Car limit | ATO reference |
| 2024-25 | $69,674 | The indexation factor is 1.023, calculated as 445.7 divided by 435.5. |
| 2023–24 | $68,108 | The indexation factor is 1.052, calculated as 435.5 divided by 413.8. |
| 2022–23 | $64,741 | The indexation factor is 1.066, calculated as 413.8 divided by 388.1. |
| 2021–22 | $60,733 | The indexation factor is 1.027, calculated as 388.1 divided by 377.9. |
| 2020–21 | $59,136 | The indexation factor is 1.027, calculated as 377.9 divided by 368.1. |
For detailed examples of how to apply the car limit, visit the ATO website.
How the Yearly Car Limit is Calculated
The car limit is adjusted annually in line with the changes in the motor vehicle purchase sub-group of the Consumer Price Index (CPI).
Indexation Process
- The indexation factor is determined by dividing the sum of the index numbers for the quarters in the year ending 31 March by those for the quarters in the previous year ending 31 March
- The car limit for the income year is then calculated by multiplying the previous year’s limit by the indexation factor unless the factor is one or below, in which case the previous car limit remains unchanged.
For the most accurate and updated details, refer to the ATO’s official guidelines.
Consulting your Allan Hall Tax Advisor can help you run tailored calculations and find the most tax-efficient approach for your circumstances. Reach out today for a personalised assessment of your tax strategy.