Appreciate the advice & comments.  Something to work with. 

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Im pretty sure you would not get past an audit claiming mods, unless those mods were required to enable the vehicle to carry out its work-related requirements when initially it was not capable.

For example, if you needed a super strong tow bar to tow a 400m long aircraft carrier, you could claim or depreciate (depending on cost) the cost of that super strong tow bar.

The average person would be hard pressed making a decent argument that you needed more than 240kW for work reasons and the original 240kw was inadequate for your work needs.

I do not believe you can legally claim most performance mods.

You can of course claim the standard c/km or similar common methods. Mods would rightly be considered primarily for personal not work use unless you can prove they were actually needed for work. Not easy.

There is nothing stopping you claiming anything...but what is important is whether it will stand up to an audit - and performance mods in general will not for the average person.

I think if you tow a lot, you could justify brake upgrades, perhaps a stronger clutch or auto trans cooler. But you would probably have to show that the towing was at or beyond the factory towing capacity of the vehicle.

However I can tell you now, if you try to claim an Phase 3 type mod, and even manage to hold a straight face whilst doing so, its more than likely to be knocked back by the ATO if they are looking into your finances.

Edited June 21, 200521 yr by mickq

Based on the various responses including yours and our friend with the CPA as a spouse, I'd agree it sounds dodgy as hell.

I'm going to see an accountant and let them decide.

My thought would be, as I said, invoice for replacement exhaust for example and you have a significant portion of the work already. No fraud or even on the balance of probabilities any intent to deceive - I think an audit would be hard pressed to prove that my reason for such a replacement wasn't 'cause I hated the look, or sound, or thought Ford Service were dickheads for not fixing the rattle on my new car (as reported actually) and I'm just a nutter who spent the money. Maybe even that isn't 'legal'.

I tend to think that adding $6K for THE LOT at the end of fin year, or even over a year on a new car would attract attention - the wrong type of attention! Then again 1/2 this year and 1/2 next year.....

In any case, I'll see what happens.

Cheers.

l gave this some thought a while back. At the time l was planning on buying a T and having the mods done by the dealer so it all went into the new car price. Have the dealer generate you a highly undetailed invoice and away you go

Spoke to my accountant (40 years in tax!).

Agrees it is a grey area, but can certainly put it against the value of my car as just general improvements and depreciate it against the life (say 3 years) of the vehicle (same as if the dealer did it).

Don't forget improvements increase the value and resale value.

As the car was purchase for about $48-49 the mods will fall under the limit allowed.

No no to try and do it as any sort of repair.

I'm happy.

Im also an accountant (but you already know that from my response to your insurance thread) but yeah you have a problem, which is hard to work around if at all ie. by reclassifing assets as expenses (via wording in invoices).

The solution could have been to do what I did, that is buy one (via salary packaging) already modified!

That way any replacement parts will generally always be repairs as it already far departed from being stock (save the turbo).

So for it to be treated as an asset it would have to be an improvement from what it was (I doubt that simply because it has more rwkws that would mean it it would be deemed as an improvement for tax purposes) would mean it would be harder to prove as anything other than a repair.

Cheers,

Ford Grunt (Ben)