“If we are buying or leasing a vehicle this year, how much can we actually claim and where do the new limits kick in?”

A new business vehicle can be exciting. The tax rules surrounding it? Slightly less exciting.

But if you are looking at buying or leasing a vehicle during 2026–27, knowing a few numbers before signing the contract can make a meaningful difference to the real cost of the car.

The car limit is now $69,883

For passenger vehicles first used or leased during the 2026–27 financial year, the tax car limit is $69,883.

This is generally the maximum value you can use when calculating depreciation deductions, regardless of how much you actually paid. So if your business buys a passenger vehicle for considerably more than $69,883, spending the extra money does not necessarily deliver an extra depreciation deduction.

That does not mean you should not buy the more expensive vehicle. It simply means the tax saving should not be the reason you do it.

GST is capped too

For GST-registered businesses, the maximum GST credit on a passenger vehicle is also linked to the car limit. For 2026–27, the maximum GST credit is $6,353.

Buying a more expensive vehicle generally will not increase that GST credit, although GST may still need to be accounted for on the full sale price when the vehicle is eventually sold.

Then there’s Luxury Car Tax

The Luxury Car Tax thresholds have also increased.

For 2026–27 they are:

• $91,661 for fuel-efficient vehicles
• $80,809 for other vehicles.

Where Luxury Car Tax applies, it is generally charged at 33% of the value above the relevant threshold. This means two similarly priced cars can produce very different tax outcomes depending on their classification.

Business versus private use still matters

Buying the car through the business does not automatically make every kilometre deductible.

Where a vehicle is used for both work and personal purposes, the deductible amount will generally need to reflect the business-use portion. That is why records such as logbooks and odometer readings remain so important.

Look at the whole cost, not just the purchase price

Before buying, it is worth comparing:

• depreciation deductions
• GST credits
• Luxury Car Tax
• finance or lease costs
• running costs
• expected business use
• and eventual resale value.

Sometimes a slightly cheaper vehicle produces a better overall business outcome, even when the more expensive option looks attractive on the showroom floor.

Final thought

Tax should not choose your next vehicle for you. But it should absolutely be part of the decision. If a new vehicle or fleet upgrade is on your list for 2026–27, your Aspen advisor can help you compare the real after-tax cost before you sign on the dotted line.