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Buying a company car

Discussion in 'Accounting, Tax & Legal' started by Stuman, 6th Nov, 2008.

  1. Stuman

    Stuman New Member

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    Location:
    country VIC
    Hi, I hope someone can help me with this. I have the money in my company to purchase a used 2000 model Landcruiser, but do not know how to do it in the most tax effective mannor. As my business is very small <$200K per year turn over, I would like to claim as much of this cost as possible now, and not over 8 years or so.

    Can anyone give me some guidence as to how to go about doing this.

    All help would be greatly appreciated.

    Thanks
    Stu
     
  2. Rob G.

    Rob G. Well-Known Member

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    Location:
    Melbourne, VIC
    You can self-assess the effective life of a depreciating asset.

    The Commissioner's default effective life for a CAR is 8 years based on normal use.

    If you want to use a shorter life you need a reasonable argument.

    A Landcruiser is probably not a car. Also, if it is used in a harsh environment it might be expected to wear out more quickly. Check out effective lives for assets for your particular industry.

    A second hand car might reasonably be expected to last less time.

    In any case, use the diminishing value method if you want to claim larger deductions sooner.

    Cheers,

    Rob
     
  3. MattR

    MattR Well-Known Member

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    I'd buy it through the company as cars in general are concessionally taxed. In addition you'll be able to get the GST input credits.

    Do a log book if high business usage, or if not look at the Statutory method if you are doing at least 15,001 kms p.a.

    Rob's comments concerning motor vehicles that are not cars, give another direction. If a L/cruiser is not a car, then there will be no fringe benefit if your personal (private) usage is only ;
    - used to go to or from work
    - only incidental private usage
    - only ordinary work travel for work stuff
     
  4. Rob G.

    Rob G. Well-Known Member

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    Yes, possible FBT breaks if it is a commercial vehicle not primarily designed for carrying passengers.

    If you are getting a tray/ute or stripped out troupie then there may be possibilities.

    Otherwise you will need to keep a log book for luxurious people movers. Also there may be a cost limit allowed for deduction calculations in this case.

    Cheers,

    Rob
     
  5. AsxBroker

    AsxBroker Well-Known Member

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    Location:
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    Hi Stuman,

    What about renting/leasing the vehicle?
    This would mean that all of the costs might be tax deductible for the business.

    Cheers,

    Dan

    PS I'm not a tax adviser or accountant! Speak to your accountant or tax adviser to discuss whether this would be suitable to your individual situation.
     
  6. Rob G.

    Rob G. Well-Known Member

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    Location:
    Melbourne, VIC
    If its not deemed a luxury car then leasing could have some advantages.

    Cheers,

    Rob