Purchasing a Car Under a Business Name
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- čas přidán 27. 06. 2024
- Before you buy a car under your business name, there A LOT of things to consider. Factors like the type of vehicle, whether it's new or second-hand, and how you use it, all have different tax implications. Let me break this all down for you so that you can make the best decision for your situation.
And of course, always consult your accountant before purchasing a vehicle for your business.
CHAPTERS:
00:00 - Intro
00:45 - How a Car Purchase affects your Income Tax
01:42 - How a Car Purchase affects GST
03:02 - How a Car Purchase affects Fringe Benefits Tax
03:57 - Basic Example of How Income Tax would apply to your Car Purchase
05:07 - Basic Example of GST would apply to your Car Purchase
05:48 - Basic Example of Fringe Benefits Tax would apply to your Car Purchase
06:56 - Scenario 1: Purchasing a New Car from a Dealership for 3+ Years
07:32 - Scenario 2: Purchasing a Second-Hand Car from an Individual
08:04 - Scenario 3: Purchasing a Lamborghini
08:27 - Scenario 4: Purchasing a Ute, Truck, or Van
08:55 - Checklist of Important Questions to Consider before Purchasing a Car
09:56 - Final Thoughts
Thank you for watching this video. I post weekly videos on this channel to provide the latest and most frequently asked business questions. Please take a second to say hi in the comments below. Also, if you enjoy my content and find it valuable, subscribe to the channel, like and share it with anyone who you think might find my channel useful.
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Davie has over 14 years of experience in advising businesses in management accounting and taxation issues. He heads up a passionate team at Box Advisory Group who are dedicated to offering proactive and outstanding service to our clients.
Davie’s extensive experience in providing tax and consulting advice and astute business knowledge has paved the way for success for many businesses.
He is a member of the Chartered Accountants Australian and New Zealand, a member of the Australian Tax Practitioners Board and holds a Bachelor of Commerce degree from the University of New South Wales.
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Follow Me:
LinkedIn: / davie-mach
Instagram: / boxas_syd
Facebook: / boxadvisory
Website: boxas.com.au/
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DISCLAIMER: Please note that every effort has been made to ensure that the information provided in this video is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to contractors and small businesses. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal or tax advice. You should, where necessary, seek your own advice for any legal or tax issues raised in your business affairs.
So in short, Lamborghini needs to release a Ute model ASAP!
Great video 👍🏼
haha, and we need the $$$ in the bank ASAP!
What if my business is fiddy dollar lambo rides around the ghetto...tax right off baby 😉
Finally an Australian focusedvideo made simple. Great work mate
THANKS - check out our other videos for more tax related videos for Aussies
This is great, it's nice to have it broken down in an accessible/ understandable with relevant parameters and scenarios! 😀
Haha I also enjoyed breaking it down!
Honestly it took a long time to make this video :)
OMG LOVE your videos!! SOOOO GREAT at explaining things! Thank you!!
You are so welcome, Rachel!
A super useful video Mate!!! Easy to understand and to the mark, thanks for making this.
thanks mate! I release loads of videos like this on the weekly so stay tuned :)
So glad I found your channel! Immediately gained a new subscriber.
Thanks mate!
This was great, thank you!!
No worries mate!
that’s amazing bro. Well done
Thank you so much 😀
Excellent, exactly what I needed to know
Thanks for watching mate!
Instead of telling my friends not to, I can just link them this video now. Great stuff!
Exactly! Thanks mate
Great video! This is super informative.
Glad it was helpful!
Great video. Thank you
Glad you liked it!
Really good video man
Cheers mate! Thanks for watching
Great information. Thanks
Glad it was helpful!
that helped a lot thanks
good video Davie. Consider the FBT is actually Tax Deductible. Even though it is 47%, once you get a tax deduction of 25%, it makes it average out around 35.25% actual cost. Compare this to personal tax rates of around 34.5% over $45k, and there isn't much in it. derek
Very helpful
thanks!!
For the 202 FY is temporary full expensing the only option available to claim an immediate deduction assuming you bought the car in the 2021 FY
thanks brother
No problem mate
Thanks for the vid. Can you explain novated leasing or purchasing vehicles on a leasing agreement?
its similar if you own the business. Doesnt impact the tax differently. I always recommend to business owners to just go on leasing agreement or hire purchase loan. Dont bother with novated leasing. This is only beneficial if you are an employee of a company as the company pays for the expenses and taxes. I dont go into detail on the benefits for novated lease for employees as its not my specialty. I work with businesses.
perfect
Hi mate! Great video. I have a dog wash mobile business. Working 5 days a week. what’s the percentage of the car you’d claim as business? About %70? And also I’m looking into expanding the business and getting another car and another trailer. The car would be a 40k Ute and I would buy under a car loan with a deposit. When I buy under a loan and not upfront do I still get to claim the 40k straight away + the 10% gst back? Or I can only claim the deposit + how many instalments I’ve paid until the time of that BAS? Thanks mate
Hi Davie, and thanks for the video. As an employee who uses my own vehicle to transport goods for work and is paid through TFN, can I claim the purchase of my vehicle last year as a tax deduction?
This applies to Canada
Great video, thank you so much. Just a question, can a sole proprietor also make use of all these benifits or just a company?
Yeah most of the time! As long as you are running a business and registered for gst. You also don’t need to worry about fbt for soletraders.
Can you make a video about how to find and access Australian accounting standards.
thanks for the recommendation. I dont think there needs to be a video on this. You can just google the The Australian Accounting Standards Board and they provide all the standards there.
Awesome video mate. Very helpful. Do you recommend buying a Ute under my business outright or finance and is there a difference?
thats all about opportunity cost of the cash. Finance allows you to keep the cash and invest it else where in the business.
but if you have no use of it then maybe its better to use the cash to buy outright.
@@DavieMach fair enough. interesting. Thanks for the response 👍🏼
Was that a clip of Hillary Duff in younger? 😊
My girl needed a bank statement and stub last week and I was worried about her not getting a new car frm the dealer 😴 but everything good now only because of deelscafe good work .✅
Is this still update to date information?
Hi DaVie,
My husband and I had two cars under his business. Mine is currently paid off. Can I claim my bit. I paid every cent related to my car, rego, loan and insurance
Hey Davie
Good vid to show differences btw buying private or under business.
I got a question about how do we record the transaction when purchasing car value over the limit. Let say the 100% business car was A$60,136 paid upfront and GST incl. As the limit was $59,136, how do you record the A$1000? what category or account would you put the $1000 to? Do we cr cash and dr drawing ?
the amount above the limit $1000 is BAS Excluded by still goes to Motor Vehicle at Cost account.
Great video, thank you so much. Just a question, can a sole proprietor also make use of all this or just a company?
I’m more than happy to speak to accountant but I sound like an idiot when I call up and the receptionist asked what kind of booking I want to make I don’t know who I meant to be asking for when I say I need to be torn accountant about fringe tax benefit is there a particular type of accountant and or is this a particular kind of tax question that I should phrase so that I sound less ignorant?
What about if I trade in the car how long after purchasing the car can do that
I am thinking of setting up an electrical sole trader business in Sydney. Are you available to help me out? not sure if you are working in NSW.would love to get some advice from you.
What’s about EV’s now that they are exempt from FBT. Can I buy a car under the business for 100% personal use?
Good content thanks. Do you need to pay back the tax deduction we claimed ($59,136) when we sell the car?
No you take up the sale price as income and pay tax on that. But if you sell a car, most of the time you buy another one so the purchase offsets the sale.
@@DavieMach Thank you for the reply. If we claim the 59k but later on sold the car for 80k, would we pay tax on 80k or 59k? Does your team do tax returns in WA?
Awesome! I bought a used truck for 900. I’ll be using this truck 50/50 personal/business. I’m going to make repairs costing upwards of 5k. Is it worth registering in a business name?
If it’s used for business of course you should
What about if the cars through a vehicle subscription service? Carly say it’s tax deductible? Would you have any more info on that?
Yes it would be but only on the monthly payment or weekly payment
It’s kinda like rental expense
is there vehicles that are FBT exempt, such as toyota Landcruiser 79series dual cab- if needed a GVM upgrade to 4200kg ?
Hi Lachlan,
FBT only applies if there is an individual non-business benefit obtained from the purchase of the vehicle. If you are working in construction, then the UTE or Dual Cab is considered an FBT exempt motor vehicle and would not have FBT on it as it is considered 100% business use. Note that although the car tax limit for 2021-2022 is $60,733, if your Land Cruiser and GVM can carry a load of more than one tonne, the car tax limit does not apply to you and you can depreciate the cost of the entire vehicle.
www.ato.gov.au/general/fringe-benefits-tax-(fbt)/types-of-fringe-benefits/car-fringe-benefits/fringe-benefits-tax---exempt-motor-vehicles/
Hi Davie, I am your regular subscriber. Just wondering as a mortgage broker i personally bought a car on personal name. can i deduct some portion of registration, depreciation? thank you
Yes you can... You can deduct that same percentage of business use in both a personal return or business.
Hello am Sharanga from srilanka
I have a team and investers, we would like to start a criypto currency treading business but in my contry we dont have a law and any opportunity to take registasion of like this business if i do Australia registasion how can you help me.
Does the instant depreciation always apply when buying it through the business or is that just a COVID-19 tax break?
It’s been around before covid 19 but during covid it’s went from $30k limit to no limit now.
Yes you can only access it in a business.
Hey, I’ve just started a mobile detailing business and I want to buy a Ute to store my equipments but I also was thinking of purchasing a Ute for personal use. Would it benefit me to put it under the business if I’m just starting off on the business ( not making a lot of revenue).
I would claim in the business. But are you a soletrader? Your name and business is the same thing if that’s the case.
Quick question, would it be possible to buy a used car through a dealer through our business (partnership) for 100% personal use? Does the car need to be brand new? Looking to spend about $15k on a second hand car.
It maybe hard to do this as you will in most cases require an accountants letter to state the car is for business use. Most financiers ask for this letter lately. Why do you want to buy it through the business?
Ijust started a van corvesion company 2yrs ago. I build mobile dog grooming vans. But looking for other avenues so Im looking to buy a sprinter van for 60,000 invest 20k in van conversion parts. I and hopefully sell it for 150 to 200 within 4 to 6 months at the latest. Should i use my llc? What are the pros and cons. It be used for 100% for business.
Sounds like you are based overseas and not in Australia. Best to speak to a local accountant for some advice!
just a question, if you lease, say $1000 per month then had car back in 3 years. So if personal use is say 20%, does the individual pay $200 per month ?
Hey
The individual doesn’t pay $200. You just don’t claim the $200. You claim $800 per month.
Thanks
What do you recommend for a sole trader to do? Lease or...
Hard to say with out knowing your situation.
It’s mainly opportunity cost. Best you speak to your accountant!
What do you look for in a good accountant?
I have a great video about this please check it out!
Wait, are these taxes only applicable to Australians?
Yes yes Australian taxes
What if the business have multiple shareholders? But you are the owner?
There is nothing wrong with having multiple shareholders
Hi does one need to buy the car and get it in use by 30th June 2021?
If you want to claim it in the 2021 FY then yes it has to be ready for use by 30 June. It’s been a bit difficult for clients this time round due to lack of stock.
Is this for Australia?
Yup 👍
How about insurance? If buy in business name then must get commercial insurance no? Much more expensive.
Yes better to have in business name for claiming.
Would a G-Wagon MB come under "Ute, Truck or Van" like it does in the US?
I doubt it haha
@@DavieMach Why does everyone recommend owning your own business to own a supercar then?
@@izakmizrahi8569 great question one reason why is that most owners get a loan for the car. its easier to get a loan through the business for the supercar.
MB meaning ?
@@MegaPhakamani Mercedes Benz
how about leasing a car under a business?
Depends on what type of lease
But in Australia most leases are for 3 -5 years and the tax implications are similar to this video
Can I trade in my Lamborghini with a lesser value car and not pay GST?
Best to have a chat to your accountant. Too hard to say with out knowing the ins and outs of your taxes and structure
What if the business is not registered for GST?
Then you cant claim GST but you can use the small business asset write off.
@@DavieMach Do we still need to pay GST on selling the car (even if the business in NOT registered for GST and Car bought on the business name) ?
@@nishitshah1 if you are under the threshold and not required to be gst registered then no you dont need to pay gst.
Totally confusing
It really wasn't that confusing...the simplified version is to avoid purchasing a vehicle that ISN'T a ute, truck, or van. You SHOULD purchase one of those three options (ute, truck, or van) IN YOUR BUSINESS NAME to receive the maximum benefits so basically purchase/lease a NEW G-Wagon (for example) instead of a Corvette for your business DIRECTLY FROM the dealership.
haha it would make sense but utes, trucks and vans dont fit every industry or business. I dont think the ATO will allow us accountants to claim 100% business use on an ute, truck or van.