Can I buy and then sell an asset and still claim the 50% allowance?

I have a small business with less than $2 million turnover. Can I purchase a new car, claim the rebate and then sell the car in a month before purchasing another car and claiming the rebate again?

It sounds too good to be true, doesn’t it? And generally when that occurs it is.

The purchase of a new car for your business would generally qualify for the investment allowance. While the investment allowance legislation does not have a qualifying period for which assets must be held, your problem would be with the purpose test.

To be eligible for the investment allowance an eligible asset must be purchased primarily for use in a business in Australia. Where an asset was purchased and on-sold shortly thereafter, and then replaced by a similar asset, the ATO would likely question whether there was ever an intention to buy the asset for use in your business. If they formed that view your claim for investment allowance would be denied and you would be exposed to penalties and interest.

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