In Australia, http://www.strolf.com/ owners may be able to take a tax deduction for business use of their vehicles. In most cases, they will be able to take a deduction related to interest paid on a loan or a write-off of up to 100 percent of a lease payment. It may also be possible to depreciate the value of the vehicle for tax purposes. Finally, those who own a car for business purposes may be able to take a deduction for kilometres driven in that vehicle.
How to Find a Car for Business Purposes in Australia
To find the best deal on a vehicle, it may be a good idea to use car buying services especially if it’s your first time buying a car. Car brokers can scour the country looking for the car, truck or van that you need at a price that you can afford. In some cases, it may be possible for car brokers to find vehicles outside of the country and import them at a fair price. The use of car buying services may be ideal for those who don’t like to negotiate or need to spend their time dealing with customers or otherwise growing their businesses.
What to Know About Buying a Company Car for Small Business
Australian tax law allows you to deduct expenses related to the business use of a vehicle. If you choose to lease a vehicle that you use 100 percent for business purposes, you can deduct the entire lease payment each month.
If you use a car 50 percent of the time for business purposes, you could deduct half of the lease cost. In the event that the car was purchased, a business owner could deduct the business portion of a monthly payment plus interest on a loan.
Those who drive a car for both business and personal reasons should keep detailed records of how it was used in a given year. Australian law allows for a deduction of 66 cents per kilometer for up to 5,000 kilometers of business driving per year.
Depreciation Rules When Buying a Car for Business Tax Deduction
Under Australian tax laws, a company car can be eligible for a $5,000 tax deduction in the year that is purchased. After that, the cost of the car may be pooled with other expenses that are all eligible for a 15 percent deduction in the first year. After that, eligible expenses can be deducted at a rate of 30 percent until the vehicle has no market value remaining.
What Is the Best Company Car for Benefit in Kind?
In Australia, you may be required to pay a benefit in kind (BIK) tax that is a portion of the car’s market value. This tax is largely based on the emissions that a car produces, which means that electric cars and other economy models may be preferable to most employers. However, you should also consider that employees may care more about comfort and style than paying taxes, which means that an electric car may not be seen as much of an incentive.
What Else Should Business Owners Know About Company Cars and Tax Deductions?
Business owners should be advised that they want the best value for their money regardless of possible tax benefits. Paying too much to buy or lease a car is going to hinder the company’s bottom line in the future. Therefore, it is always a good idea to seek a vehicle that is going to get the best return for each dollar spent.
One of the perks of owning a business is the ability to deduct expenses such as paying for a company car. Whether you run a large corporation or a small company in town, these and other deductions may help you recoup some of your upfront costs and make it easier to build a profitable entity. Those who have questions about whether or not a tax deduction is legal are advised to seek out the advice of a tax attorney or other qualified individual.