Are demo cars covered by the 50% tax rebate?

New cars used primarily in a business in Australia are eligible assets for the investment allowance.

The legislation provides that an asset will not fail the ‘new’ test where there has been use for testing and trialing purposes. A demonstrator vehicle may fall into this category.

Where the vehicle has a low number of kilometres and has simply be used for demo purposes it is likely to qualify. If the vehicle however was being driven to and from home by the salesperson it may fail the ‘new’ test.

There are no absolutes on this and each case would be determined on the facts. Most situations will be reasonably identifiable, but the older the vehicle and the more the kms, the greater the risk that it would be deemed second hand.

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