If you are self-employed or own your own business, buying a car is about more than just getting from one place to another, it’s also a great tax benefit. Unlike other people that are in the market for a vehicle, anyone that needs a car/s for business has the additional benefit of being able to claim expenses to offset the tax bill.
That being said, everyone’s circumstances are unique so you should always consult with an accountant regarding your situation to see if this is right for you. However, in general, a percentage of the cost, equal to the amount that the car is used for business, can be claimed. Here are some of the major benefits:
- Finance Repayments
If an accountant can verify that a certain percentage of the cost/time you use the vehicle is in order to conduct business, you will be able to claim that same percentage of your repayments each month as a deductible expense.
- Motor Vehicle Expenses
The running costs of the car such as insurance, servicing, roadside assistance and fuel might also qualify as a company expense on the car.
- GST Credits
If you are registered for Goods & Services Tax (GST), you may be eligible for a GST Credit. In this case, since the vehicle is considered an asset to your company, the entirety of the GST value on your tax invoice can be claimed.
In addition to the above, other tax considerations include:
- Lease payments
- Kilometres travelled
- Petrol costs
- Cost of damage repairs
- Maintenance costs
- Membership fees (e.g. road-side assist)
- Insurance premiums
- Interest on the car loan
You might be liable to pay Fringe Benefits Tax (FBT) on the car’s personal usage, but this will depend on each situation. Lastly, not every type of vehicle or expense may qualify for tax deductions.
Are you looking to acquire a new car for your business? Contact us today to find out how you can arrange a company car loan today!