Anyone on a car allowance? need advice! around$1300 a month

[EDManual]

I can change from a company car to a car allowance. should I?

Thing is I do around 6500km a month. Thats 78,000km in a year.

This is what I figure:
Insurance : $600
Rego: $500
Tyres: 2 sets $800
Maintenance: every 15,000km * 5 *200: $1000
Interest on cars worth: $30000*.08=2400
------------------------------------------------
That equals $5300 and leaves $1300*12=$15600-$5300= $10300 for petrol and depreciation.

Hmmm

So i want an RTV ute on gas, gas cost ave .45/litre, car does 15l/100km, thats $6.75 per 100km. 78,000km / 100km =780*$6.75=$5265 for gas

Still have $5035 left for depreciation.

I believe you can claim depreciation as a deduction too, does this help me?

Now would I be getting a good deal or not?
What else can I do to help my income?

[DOC]

If given the choice probably would keep the company car rather than an allowance.

however if buying a new RTV or any ride for this purpose be aware if you part ways with the company the car allowance stops and your payments dont.

edit
your accountant would be your best call for advice.

[parawolf]

Speak to your accountant as there could be tax implications either way you want to go.

I used to get $850 a month for a car allowance which would cover nicely the repayments on a BA XR6 with insurance and petrol. However since i've left that company, and I don't need a car for my current job i'm paying $$$ for a car I don't use (hence its up for sale).

You might find it 'easier' to deal with a company car, rather than a leased/novated/hire-purchase car.

[Tote]

You need to consider your private usage, you can only claim business usage as a tax deduction, this is determined from a log book kept for 3 months.
Your tax bracket will also influence your decision as the deduction is off your taxable income.
I have a company car but most of my Km are to/from work so it is the cheapest option for me by about $10K.
As discussed above ask your accountant the question.
regards,
Tote

[Rodp]

I run on a car allowance basically because I don't want to drive around in a BA XT company provided car. I've never really calculated whether I come out ontop but I would suggest at the very best I would break even (the cost isn't my driving factor as it appears to be yours). I only do ~30k business k's a year. I get 15k ontop of my base salary to cover my car expenses. This was a calculated figure based on running a car several years ago... and the price of petrol running a V8 now... whoa.

I guess you would have to factor what your taxable income is. Everything you spend on the car is tax deductable based on your % business kms including the depreciation on the car at the end of the financial year. My current log book is based on 85% business kms so therefore I'm able to claim 85% of fuel, maintenance, insurance and depreciation as a tax deduction. A nice little bonus when I sold my EF was that I sold it for a lot less than what it had depreciated to, so the difference between the depreciation and what I sold it for was around a $10,000 tax deduction.

One thing you do have to be careful of and a number of people I know fall into this trap is that you'll never get back the money you actually spent on the car. A tax deduction is exactly that, a tax deduction. Simply, If you make $50k a year and have $10k worth of vehicle tax deduction (adjusted by business use) then your tax return is the difference between what you paid in tax and what you should have paid if you were on $40k. That would probably equate to roughly $3000. Not the business use of $10k which a number of my colleagues fell for when they wanted to run private cars.

You'd probably not get a definitive answer as to what your best option is on here without us knowing particulars that you probably wouldn't want to share. I get my tax done by an accountant who gives me the low down on whether I'm doing something stupid or whether I can afford what I want to do and base my financial decisions (purchase of a new car and when) on that.

[Charliewool]

There is also the GST issue.
Beware of buying the car for business & claiming the GST component, as when you sell, you must also PAY the GST on the sale price of the vehicle.

[EDManual]

Thanks for all the tips guys! I am doing some figures using info on the ATO website. I use the car 100% for work, as I work from a home office, and service clients from here :-D Thats a good thing I think....

Something that I consider better here is that I choose the car I get, and ! I can tow my boat(with an RTV) or race it(If i chose a WRX) at autocross races without getting sacked :-) cant do that with my old company car!!

Its interesting this car allowance thing. I basically bump my income up by 15 grand, I claim my 10 grand expenses, plus 33% dep exp on utes in the 1st year($10k) so have a deduction of 20k. and i am paying 30% tax, gives me $6000 back. So now I have 11 thousand bucks extra! hmm! that couldnt be right could it!?!!

Of course this sounds better than it is, as my new ute has nearly 80,000km on it and would be worth less (maybe from 30k to 22k).... dam got excited for nothing(well $3000 in this instance isnt quite nothing).

[MYV8]

[QUOTE=EDManual]Thanks for all the tips guys! I am doing some figures using info on the ATO website. I use the car 100% for work, as I work from a home office, and service clients from here :-D Thats a good thing I think....

Unless you have another vehicle, if audited by the tax dept they will not believe that it is 100% business use. 85% is a realistic figure. Been there done that!!!!
Sixty percent of my Co Cars are now utes.

[Dave_au]

Originally Posted by MYV8

Sixty percent of my Co Cars are now utes.

Yeah the ATO is beginning to look past that where a ute has been choosen solely for the purpose of avoiding FBT on cars

[parawolf]

Originally Posted by MYV8

Unless you have another vehicle, if audited by the tax dept they will not believe that it is 100% business use. 85% is a realistic figure. Been there done that!!!!
Sixty percent of my Co Cars are now utes.

If you have a log book that says 100% business use, then they cannot complain. They can force you to take a new log book for the following year as log book figures can be rolled over year on year for 3 years (i think).

I think the worst they can do is take your log book, accept it, force you to do a new one and do a targeted audit on it the following year.

Speak to your accountant. This is what you pay them for, plus its a tax deduction.

[Rodp]

Originally Posted by parawolf

If you have a log book that says 100% business use, then they cannot complain. They can force you to take a new log book for the following year as log book figures can be rolled over year on year for 3 years (i think).

I think the worst they can do is take your log book, accept it, force you to do a new one and do a targeted audit on it the following year.

Speak to your accountant. This is what you pay them for, plus its a tax deduction.

That's what they pretty much did to a guy I work with. He was (legitemately) claiming 100% business use on a car he was doing around 60,000kms/pa on. He had 2 bikes at home, a Harley and a Buell so his personal travel was done on either one of those bikes. He's possibly the most anal person you'd ever meet when it came to keeping records and the auditer even went to the point of comparing his logbook against his petrol receipts to compare his mileage against his fuel consumption. They did this to him two years in a row and twice it was discovered that he was entitled to more money back from the tax dept. :nutsycuck

[cogdoc]

A supplied company car will always be the cost effective option if you are happy to drive whatever it is. You don't have tax implications, you can quit/leave your employer easily, but mods and choice are pretty much zippo. They do linelock all day though...

If you care what you drive, and you want something in particular, then the allowance is the go. It's pretty likely it will end up costing you some money if you start looking over the $45k mark, but personally I am very happy to do that. A good accountant will set you straight. You do really need to think are you willing to remain in your job, or a similar car allowance job for the next 2-5 years to cover your car....

[OzJavelin]

Go work for Telstra and get a salary sacrifice "fleet car". You can choose from a wide range of models, they are completely private-use and you just hand them back at end of two years (or when you leave).

Oh .. none of this actually answers your question ..

[Mondie]

Think of it like this (using your figures)

Allowance = 15600 per year

less

600 insurance
500 Rego
800 Tyres
1000 Mintenance
2400 Interest
5265 Fuel
6750 (22.5% Depreciation, reduces each year after)
Assumming 85% business use this comes to 0.85* 17315 = 14718

This leaves nearly $900 that you will be taxed on.

l think its a bad deal, you are doing huge km and so will have plenty of maintenance to pay for later on, after 3 years the RTV wont be worth a lot with 200km+ on the clock plus you are exposed on rising fuel prices. Most importantly, your assumptions only take into account loan interest and not paying off principal.

For the sort of km you do l reckon you would want closer to 20k per year for it to be worthwhile.

[Smoke Pursuit]

Plus you will have a residual at the end of the lease period which will be roughly 10 grand depending on how you work it out.

Personally I wouldnt go there, take a work car and let your employer have the responsibility.

[Bevan Boy]

everyone has pretty much provided u with the answers

as an accountant i suggest keep the company car.
Should u get a car allowance u will be taxed on this money. Then the owness is on you, to prove and keep receipts of all expenses to offset this income (again an inconvenience to u, and more risk)

For eg, say ur car allowance equates to $10000 for the year, but u only claim $8000 in deductions for motor vehicle expenses, then thats $2000 that u are being taxed on to own that car. At the top tax bracket thats 48.5%, so roughtly ur paying $970 in tax that u wouldnt have should u have kept the company car.

With a company car the only implication u have is to report ur FBT benefit that the company has provided u. This does not result in u paying extra tax, but will affect ur total taxable income in relation to claiming rebates and tax offsets. But again this will prob not have much affect on u dependent on what ur salary already is.

[deesun]

Just quickly I think you are underestimating your tyres and maintanence.$800 for two sets is a bit low especially if you are looking at any performance car. $1000 maintanence could be a bit shy of the mark too but I guess if its a new car maybe,my 40k service was about $400 alone.