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30% capital allowance and cars

Discussion in 'Accounting, Tax & Legal' started by chris_qld, 3rd May, 2009.

  1. chris_qld

    chris_qld Active Member

    Joined:
    21st Jan, 2008
    Posts:
    44
    Location:
    brisbane
    I bought a new car under my (sole director) company's name last Sept. I'm thinking of selling it to one of my relatives then buying another new car in order to get extra benefit from the 30% capital allowance. I wonder if I can do it or not. Thanks in advance.
     
  2. Rob G.

    Rob G. Well-Known Member

    Joined:
    6th Jun, 2007
    Posts:
    717
    Location:
    Melbourne, VIC
    1) The 30% additional allowance if for BUSINESS taxpayers.

    2) Disposal is a balancing event for the old car. The company is deemed to receive market value with related parties. If there is a gain over written down value this is income, or a deduction if you get less.

    3) If your relative actually pays less than market value, or is provided with a non-commercial "loan" by deferred payment, or debts forgiven, this may give rise to fringe benefit tax, or even deemed unfranked dividends to you as the "employee" or a mixture.

    4) And don't forget good old Part IVA, which might be invoked if it appears merely to be a scheme with a dominant purpose of avoiding tax.

    In other words, have a reasonable business argument for doing it - and keep the terms commercial.

    The devil is in the detail, so make sure you talk to your business Accountant before acting.

    Cheers,

    Rob
     
  3. Superman

    Superman Well-Known Member

    Joined:
    6th Nov, 2007
    Posts:
    343
    Location:
    Gold Coast, QLD
    Agree with Rob G.

    Seems like a lot of stuffing around when the actual tax savings might not be that great.

    Crunch the numbers and only do it if it is worthwhile.

    If you are buying a new car anyway do it. Otherwise let let it roll :)