Can I Buy a Car Through My Business? (2026 Guide)

Apr 27
4 min read

Updated: May 15

A lot of business owners ask this question:

“Can I buy a car through my business and save tax?”

The short answer is yes — but it depends on how the car is used, how your business is structured, and whether the ATO sees it as a genuine business expense.

Buying a car through your business can help with deductions, GST credits, and even the instant asset write-off. But if it’s done the wrong way, it can also create problems like Fringe Benefits Tax (FBT) or denied claims.

Let’s break it down simply.

Can You Buy a Car Through Your Business?

Yes — a business can buy, lease, or finance a vehicle if it is used for business purposes.

This could apply to:

Sole traders
Partnerships
Companies
Trusts

But the key rule is simple:

The vehicle must be genuinely connected to your work or business activity.

Buying a personal car and calling it a business expense usually won’t work.

What Can You Claim?

If the vehicle is used for business, you may be able to claim:

Fuel and servicing
Repairs and maintenance
Insurance and registration
Lease payments
Loan interest
Depreciation
GST credits (if registered for GST)

But only the business-use portion is claimable.

Logbook Method vs Cents Per KM

This is where many people get confused.

Logbook Method

You record business trips for at least 12 continuous weeks and work out your business-use percentage.

This method is usually better when:

You drive a lot for work
Your vehicle costs are high
You want more accurate deductions

Cents Per KM Method

This is a simpler method for some sole traders and individuals.

You claim based on a set rate per kilometre, without needing every receipt.

This works best when:

Your business travel is limited
You want a simpler approach

Choosing the right method matters.

Instant Asset Write-Off (Important for 2026)

This is one of the biggest reasons people look at buying a car through their business.

Under the instant asset write-off, eligible small businesses may be able to claim part or all of the vehicle cost in the same financial year.

This can apply to:

Work utes
Vans
Business vehicles
Some passenger vehicles

The key deadline to watch is 30 June 2026, and thresholds may change depending on government updates.

Always check current ATO rules before making the purchase.

Can I Buy a Used Electric Car Through My Business?

Yes — and this is becoming one of the strongest tax strategies.

Electric vehicles (EVs) may offer:

FBT exemptions (for eligible EVs)
Lower running costs
Better long-term savings
Government incentives

This is especially valuable for company directors and business owners.

Not every EV qualifies, so proper advice matters.

What About Fringe Benefits Tax (FBT)?

This is the part many people miss.

If the company car is also used for personal purposes, FBT may apply.

For example:

Driving the car on weekends
School drop-offs
Family use

This does not mean buying through the business is a bad idea — it just needs proper planning.

Can I Buy a Sports Car Through My Business?

Technically yes, but there are limits.

The ATO applies depreciation caps and Luxury Car Tax (LCT) rules.

For 2025–26:

Luxury Car Tax threshold is limited
Depreciation caps apply regardless of the actual purchase price

So buying an expensive sports car does not always mean bigger deductions.

This is where many people misunderstand tax planning.

GST Credit on Motor Vehicle Purchase

If your business is registered for GST, you may be able to claim GST credits when purchasing the vehicle.

However:

There is usually a maximum claim limit, and it depends on the type of vehicle and business use.

This can make a big difference to the real cost of the car.

Advice from a Registered Tax Agent (No. 26244362)

One common mistake we see is people buying the car first and asking tax questions later.

That usually costs more.

The smarter move is to plan before the purchase:

Check business structure
Review FBT risks
Understand deduction limits
Confirm GST eligibility

The right structure saves more than the wrong purchase.

Common Mistakes to Avoid

Claiming 100% business use without proof
Ignoring FBT
Not keeping a logbook
Buying a luxury car expecting unlimited deductions
Missing the June 30 instant asset write-off deadline

These mistakes can turn a good tax strategy into an expensive one.

Need Help Before You Buy?

If you're thinking about buying a car through your business, getting advice first can save a lot later.

You can explore our Business Accounts or Personal Tax Services pages for help.

A car purchase should support your business — not create tax problems.

FAQs