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Car provision as a Contractor

Discussion in 'Accounting, Tax & Legal' started by try anything once, 16th May, 2012.

  1. try anything once

    try anything once Well-Known Member

    Joined:
    8th Oct, 2008
    Posts:
    117
    Location:
    melb
    I am about to start contracting in a services area directly to a company. My accountant has suggested using my existing family trust / corporate trustee as my "employer". Will be personal services income and marginal tax rate for the year is likely to be the top rate.

    I am also about to purchase a new car and it will be used for personal use almost 100%. My question is, is there a way of minimising after tax ownership costs of the new car by my employer (the trust) providing the vehicle as an employee benefit?

    If company car rules can apply, I guess the trust would need to pay FBT, but could claim input tax credits for car purchase cost, operating expenses, and also claim depreciation. Is this correct?

    Is there another option which will give a better result? For example will any of the finance companies provide novated lease service for a trust with one employee? If so, can anyone suggest one who charges the least?

    Note, the trust has cash so external financing for the car purchase is not really required.

    Thanks for any ideas/comments
    Regards
    Scott
     
  2. try anything once

    try anything once Well-Known Member

    Joined:
    8th Oct, 2008
    Posts:
    117
    Location:
    melb
    Bump and update - Associate lease

    Just a bump and update..

    I have set up a separate company owned by the trust to contract through. In regards to the car, I plan to use an associate lease - my trust (an associate) leasing the car to me via my new company. Has anyone had any experience with Associate leases?

    I also have a question about PSI but will raise that as a separate post.
    thanks