Tax Implications of Selling Your Car in Australia

Important Disclaimer

This guide provides general information only and is not tax advice. Every situation is different, and tax laws change. Always consult a qualified accountant or tax professional for advice specific to your circumstances.

Personal Vehicle Sales

For most Australians selling a personal car, the tax situation is straightforward:

No GST on Private Sales

• Private individuals selling personal vehicles don't charge GST
• This applies whether you sell privately or to a dealer
• The GST exemption applies to any personal asset sale

No Capital Gains Tax (Usually)

Cars are classified as personal use assets by the ATO. Capital gains tax does NOT apply to personal use assets acquired for less than $10,000.

This means: If you bought your car for personal use, you won't pay CGT when you sell it, regardless of profit.

The Exception: Investment or Collectible Vehicles

If you bought a car as an investment (collector car, appreciating classic), CGT may apply if:

• The car was acquired for $10,000 or more
• You sell it for more than you paid (including sale costs)

Even then, many car sales result in losses rather than gains, meaning no CGT is payable.

Business Vehicle Sales

This is where things get more complex. If you used your vehicle for business purposes, several tax considerations apply.

GST Considerations

If your business is GST registered:

• You may need to account for GST on the sale
• This applies if you claimed GST credits when purchasing
• The GST applies to the sale price
• Your BAS will reflect this

Calculating GST on Sale:

• GST = Sale price ÷ 11
• Example: $11,000 sale = $1,000 GST to account for

Depreciation Considerations

If you've been claiming depreciation on your business vehicle:

Balancing Adjustment:

When you sell a depreciating asset, you may need to make a balancing adjustment:

• If sale price > written down value: Include difference in assessable income
• If sale price < written down value: Claim difference as a deduction

Example:

• Original cost: $40,000
• Written down value at sale: $15,000
• Sale price: $22,000
• Balancing adjustment: $7,000 (assessable income)

Instant Asset Write-Off Considerations

If you claimed instant asset write-off:

• The entire cost was deducted in year of purchase
• Written down value = $0
• Full sale price may be assessable income

Example with instant write-off:

• Purchased $30,000 (fully written off)
• Sold for $18,000
• $18,000 potentially assessable (consult accountant)

Sole Traders and Partnerships

For sole traders who use a car partly for business:

Mixed Use Vehicles

• Keep a logbook to determine business percentage
• Tax implications apply proportionally
• Private component has no tax consequences
• Business component follows business vehicle rules

Record Keeping

Essential records to maintain:

• Purchase price and date
• Depreciation schedule
• Logbook records
• Sale price and date
• Any related expenses

Company Vehicles

When a company (Pty Ltd) sells a vehicle:

Automatic GST Application

• Companies registered for GST charge GST on sales
• GST credits usually claimed at purchase
• Sale creates GST liability

Fringe Benefits Tax Considerations

• If car was provided as fringe benefit
• FBT implications cease upon sale
• May affect FBT calculations for the year

What You Can Claim

Business Vehicle Sale Expenses

Potentially deductible expenses:

• Advertising costs
• Professional photos
• Roadworthy certificate
• Detailing for sale
• Agent/selling fees

Documentation Required

• Keep all receipts
• Record business purpose
• Maintain logbooks
• Document sale details

Using Cash for Cars Services

When selling to services like ours:

Tax Invoices

We provide proper documentation including:

• GST invoice (for GST-registered businesses)
• Sale receipt
• Vehicle transfer documentation
• ABN details

Business Records

This documentation supports:

• GST BAS lodgement
• Depreciation calculations
• Income tax returns
• Audit requirements

Common Questions

Do I pay tax on selling my personal car?

Generally no. Personal vehicles are personal use assets exempt from CGT, and private sales don't attract GST.

My business claimed GST on purchase. What now?

You'll likely need to account for GST on the sale. The sale price includes GST which is payable.

I did instant asset write-off. What happens when I sell?

The sale proceeds may be assessable income. Consult your accountant for specific advice.

Do I need to keep records of my car sale?

Yes, keep records for at least 5 years. Businesses should keep them longer.

Can I claim the cost of selling my business car?

Selling expenses for business assets are generally deductible. Keep receipts.

Getting Tax-Compliant Documentation

When you sell to Cash For Cars Car Removal Services, we provide:

• Proper tax invoices with our ABN
• Clear documentation of sale details
• GST breakdowns for registered businesses
• Professional records for your accountant

ABN: 93 158 871 172

Important Reminders

• Personal ≠ Business - Tax treatment differs significantly
• Record Everything - Documentation is essential
• Consult Professionals - Get specific advice for your situation
• Timing Matters - Consider financial year when selling
• Don't Assume - Each situation is unique

Need Help?

For tax-specific questions, consult:

• Your accountant
• A registered tax agent
• The ATO (13 28 66)

For selling your vehicle with proper documentation, call 0483 940 711. We provide business-grade documentation suitable for tax purposes.