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How many cars can I have in my company's name

Discussion in 'Accounting, Tax & Legal' started by chris_qld, 6th Aug, 2009.

  1. chris_qld

    chris_qld Active Member

    Joined:
    21st Jan, 2008
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    brisbane
    Hi all,
    Could anyone tell me how many cars I can have in my company's name? The company is a sole director company. I bought a new car in Augst last year and I want to get another new one for the government 50% thing.
    Thanks in advance.
    Chris
     
    Last edited by a moderator: 7th Aug, 2009
  2. Rob G.

    Rob G. Well-Known Member

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    Location:
    Melbourne, VIC
    As many as you like.

    Whether you can claim deductions depends on use and whether you are hit by PSI rules etc.

    Cheers,

    Rob
     
  3. chris_qld

    chris_qld Active Member

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    Thanks Rob,
    I'm subject to personal service income, but I use car to carry some equipment.
    cheers.
     
    Last edited by a moderator: 7th Aug, 2009
  4. Jenni

    Jenni Active Member

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    Location:
    Brisbane, Qld
    Hi

    Yes, you can have as many as you like but remember Fringe Benefits Tax applies too.
     
  5. chris_qld

    chris_qld Active Member

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    Thanks Jenni, but if the new car will be in company's name (i.e., the company is the car owner, not me), does my company should still pay for FBT?
    Cheers.
     
  6. Superman

    Superman Well-Known Member

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    Location:
    Gold Coast, QLD
    Do a logbook. Don't claim the private percentage as a tax deduction. Then no FBT no issue.

    Alternatively, there are many vehicles that are FBT exempt as they are considered commercial vehicles with minimal / incidental personal use. So if you are choosing between a 'non commercial' 4WD and 'commercial' 4WD ute such as a nice new twin cab Hilux - does it tip the scales in the decision making process?

    The list is contained in an ATO ruling. I can post the link if anyone is interested.
     
  7. Jenni

    Jenni Active Member

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    Location:
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    Hi Chris

    Superman's reference to exempt vehicles is not accurate - one of the problems with relying on "free" advice. The exemption for certain vehicles only applies if the personal use is actually incidental. This is from the ATO website:

    "An employee’s use of a taxi, panel van, utility or other commercial vehicle (that is, one not designed principally to carry passengers) is exempt if the employee’s private use of such a vehicle is limited to:

    * travel between home and work
    * travel that is incidental to travel in the course of duties of employment, and
    * non-work related use that is minor, infrequent and irregular (for example, occasional use of the vehicle to remove domestic rubbish).

    For an explanation on how to determine whether a dual cab is eligible for the exemption refer to MT 2024."

    In other words just buying a "listed vehicle" does not of itself make the vehcile exempt from FBT.

    All private use of vehicles etc is subject to FBT in a company - the FBT (usually based on the statutory formula as this gives the best result for low business use) is most often reduced to nil by journalling the FBT amount back to a loan account or making a personal contribution for the non-business use. Read this:

    Car fringe benefits

    Jenni
     
  8. Rob G.

    Rob G. Well-Known Member

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    Location:
    Melbourne, VIC
    If you are deriving PSI through your company, you can deduct the costs running cars that have 100% business use.

    In addition, you can deduct the cost of only ONE car that has less than 100% business use (i.e. at least a partly FBT car).

    If your car is parked at home due to carrying/storing bulky tools, you must use a log book to avoid it being deemed available for private use.

    I am not totally sure whether exempt use of a car (such as a panel van used for commuting but negligible other private use) actually counts as 100% business use for PSI legislation regarding limiting the number of FBT cars.

    I am also unsure when the company only claims deductions for the business portion of a car, if this does not circumvent the limit on the number of cars that you can claim deductions for. Even though this might avoid FBT, it might be counted as a non-100% business use car.

    Quite frankly, I think the PSI rules often put contractors in a worse position than employees.

    Cheers,

    Rob