Claim half your vehicle cost as a tax dedn

[500SEC]

If you have a business and buy a new vehicle (or demo) before 31/12/09, you can claim half its cost as a tax deduction. That's the kind of economic stimulus I like.

[AzuR]

Indeed we've just bought 3 new company cars ;) good times

[GT69]

ummm......IF its a business vehicle and the log book proves this, then you already claim X % of the vehicle as a tax deduction. Im aware of the 33% depreciation thing happening, but im not sure what (if anything) this changes for someone in business.

Id like to point out i have an accountant for these things. So what i no about this stuff is sweet FA.

[rodderz]

Can someone provide an example of this and how exactly it works. I've had 3 different explanations from 3 people.

The government website said that you can claim 50% of what you buy-

Ben operates a courier service. He also meets the definition of a small business entity. He orders and takes delivery of a new, more fuel-efficient delivery van in June 2009 at a cost of $30,000. Ben will be eligible to claim a bonus tax deduction of $15,000 in his 2008-09 tax return.

Does this mean if I buy a new truck for work that is $50,000, I can claim $25000 in next years tax return (if I buy after June 30 this year). In effect $25,000 less tax next year?

[gregfx]

If it is only X% business it doesn't matter - you get the 50% investment allowance if you are a small business entity....

[bloggs24]

It cant be that simple, would one have to prove the vehicle is a work vehicle e.g. log books etc?

[zetec]

Originally Posted by bloggs24

It cant be that simple, would one have to prove the vehicle is a work vehicle e.g. log books etc?

It's that simple.

you get a 50% Tax input credit, PLUS you can then write down the vehicle over the next 7 years... I'm told it can end up a 150% deduction in the long term.

So why are you spending time posting here and not buying a new car again? :

[Macca23]

Would that be right to claim if the car was a higher purchase etc? Or if payed out right?

[Bmobile]

You pay 50% of the tax on the car purchase, that you would normally pay 100% of the tax on when puchasing.

[It was 30% for a bit there but in the new budget they upped it to 50%]

As for wrighting off the depreciation and other costs involved like repairs & servicing you write that off as per normal.

It's the same deal for machinery.

Eg: If you buy a tractor for the business normally you would pay say $30000 and a percentage of that $30000 you pay would be tax say $3000. But under the new system you don't have to pay 50% of the tax part of the $30000 so if using the eg above you would only pay $1500 tax on it and therefore only pay $28500 for the machine and not $30000.

[Black F6]

Okay, if you are a small business, under $2 mil turnover, you can get a extra 50% tax deduction, for the purchase of a new asset, it must be at least 50% business related and brand new, demo i believe from the ruling would be hard to get, anyway the way it works is pay $50,000 for a new car, you would get your normal deduction for depreciation which would be 15% that year, plus another deduction for $25,000, most people would be in the 30% tax bracket so that means an extra $7,500 in your pocket, if you are in that tax bracket

[Joe5619]

It ****es me off this is only for those that have businesses. If they extended this to the private sector as well, I'd be driving a brand new FG XR6T right now.

[Bmobile]

Sorry I was wrong in my above post. Please disreguard.

[flappist]

Originally Posted by Joe5619

It ****es me off this is only for those that have businesses. If they extended this to the private sector as well, I'd be driving a brand new FG XR6T right now.

How much tax to you pay other than payg?

None?

The 50% is a tax input credit. If a business is not paying tax then it gets nothing either.

One of the reasons that we are in this mess in the first place is too many people expect everything for free and someone else is going to pay.

[SE Ute]

Originally Posted by BFXRScott

Okay, if you are a small business, under $2 mil turnover, you can get a extra 50% tax deduction, for the purchase of a new asset, it must be at least 50% business related and brand new, demo i believe from the ruling would be hard to get, anyway the way it works is pay $50,000 for a new car, you would get your normal deduction for depreciation which would be 15% that year, plus another deduction for $25,000, most people would be in the 30% tax bracket so that means an extra $7,500 in your pocket, if you are in that tax bracket

What i'm hearing with regards to demo's is that the asset, if a demonstrator must have been used only for testing or demonstrating. So for a demo car, if it's only been used for customers test driving, you can get the 50% deduction, if however one of the car salesmen has taken it down the street to get lunch, or taken it home for the weekend, then the business customer will miss out on the deduction. Something to discuss with the car yard if you're buying a demo, and probably a good idea to get something in writing from the car yard. Don't know how the ATO will police it.

[Matty4]

Hey, I'd just like to be able to claim the running costs of my vehicle, like a business can.

[Luke Plaizier]

So is it only business with an ABN that can apply for this tax deduction?

Or can it be claimed if your vehicle is simply registered and insured as a 'business' vehicle?


Luke

[Black F6]

Originally Posted by Luke Plaizier

So is it only business with an ABN that can apply for this tax deduction?

Or can it be claimed if your vehicle is simply registered and insured as a 'business' vehicle?


Luke

Have to be running a business, so yes ABN, and conducting a business

[rodderz]

I'm still up in the air about it all.

Do you pocket a clear 50% of the purchase price at the next tax return (effectively getting the new car at half price), or can you only claim 50% of the tax you can claim on the purchase (which may be a few grand)?

[Dave_au]

Some relevant points I found off Google on this:

http://www.dynamicbusiness.com/artic...wance3581.html


Well the Federal Budget came out last week and most pundits labeled it as a pretty tame affair particularly with respect to businesses. I have to agree.

There was no change for large business and the only significant change for small business was the extension & increase of the Small Business Tax Break – from 30 percent to 50 percent bonus deduction to small businesses (ie turnover under $2M) for assets acquired between 13 December 2008 to 31 December 2009.

The media have been raving about how great this measure is for small business. 50 percent extra deduction. Sounds great doesn’t it? Well I am not that excited for quite a few reasons as outlined below:

1. To enjoy the bonus deduction your business has to outlay extra cash to buy the assets. With times being tough, cash is king. Don’t forget my A-B-C motto of money matters – Absolutely Bloomin’ Cash – a business with poor cash flow is going to struggle in the coming months and years. Why put pressure on your cash flow if you don’t need to? I am predicting alot of businesses will get their cash flow requirements wrong and get into strife, thus putting more pressure on the economy if businesses fail.

2. So let’s say that you want to preserve your cash, and you want to finance the purchase instead. If you need to finance then you are merely putting more pressure on the business’ balance sheet and future cash flow commitments. Business finance is not cheap these days either despite the RBA reducing the benchmark interest rate significantly in the last year. Haven’t we learnt any lessons from the global financial crisis?

3. Most businesses operate as a company, and the company tax rate is 30 percent. This means that you are only truly saving 15 percent (being 50 percent of 30 percent) on the ticketed price of an eligible asset purchase. Not 50 percent that some business people believe. It is only 9 percent for large businesses as they are only getting a 30 percent bonus deduction. If my business needs an asset then I am going to look at second hand first because you are saving alot more than 15 percent from the cost of a brand new asset. You can probably negotiate a discount of that size as well anyway!

4. The industry that is heavily promoting the 50 percent tax break is the car industry. God knows that this ailing industry needs a helping hand & the 50 percent deduction will definitely give them more customers in coming months. But remember that you need any car purchase registered in the same entity as your ABN. For small businesses this is a company structure. And we know that when companies have cars owned by them and provided for the benefit of employees and their associates that Fringe Benefits Tax may apply. If the car is hardly used – that is, less than 15,000 kilometres travelled per year – then the FBT rate is 26 percent of the original cost of the car … every year as well before reducing by 1/3 in the fourth year and beyond that you have the car. Yes the taxman giveth … but the taxman can taketh away too!

[Joe5619]

Originally Posted by flappist

How much tax to you pay other than payg?

None?

The 50% is a tax input credit. If a business is not paying tax then it gets nothing either.

One of the reasons that we are in this mess in the first place is too many people expect everything for free and someone else is going to pay.

There is no reason why they can't give my a tax duduction on PAYG in the same way they are giving a discount on company tax!!

Most people would be in the 30% tax brack, which is the same rate as company tax.

If you are going to offer something, why only limit it to businesses??

[Racecraft]

Originally Posted by Joe5619

There is no reason why they can't give my a tax duduction on PAYG in the same way they are giving a discount on company tax!!

Most people would be in the 30% tax brack, which is the same rate as company tax.

If you are going to offer something, why only limit it to businesses??

"When you have a comatose man on the verge of death, you don't defibrillate and shock his thumb thinking that will bring him back to life, do you? Or, do you defibrillate his heart? Business is at the heart of Australia and always has been. To restart it, you must stimulate it, not kill it."

[Work Horse]

Originally Posted by Joe5619

There is no reason why they can't give my a tax duduction on PAYG in the same way they are giving a discount on company tax!!

Most people would be in the 30% tax brack, which is the same rate as company tax.

If you are going to offer something, why only limit it to businesses??

It's seen as giving businesses a hand during the GFC, as well as helping the auto industry. PAYG have had two hand outs so far.

Personally I need to replace my truck and some other equipment. So it is a little tempting to just go for it, but I can keep trading with the gear I have now and will do so until the GFC is over or it all falls apart completely.

[JOHNNOSF6]

Originally Posted by Joe5619

It ****es me off this is only for those that have businesses. If they extended this to the private sector as well, I'd be driving a brand new FG XR6T right now.

Why should you be ****ed about it, bet you were happy as a pig in shiiit when you received your rediculus $900 bonus weren't you.

This idea is about stimulating the enconemy not about ****ing away money on personal items....The bonus helped me make a decision iv'e been tossing up on for a few months now, i bought 2 new peices of equipement and now will employ another 2 drivers to operate them. Thats another 2 guys working 60+ hours a week & paying tax on their $70,000-$85,000 a year, means i now have to pay workers comp & super on another 2 employees aswell. Thats also a substaincial increase in my turnover and hopefully profit margins so again they get another 33% of anything i make due to the extra work load iv'e just been able to pickup.

[GT0132]

Originally Posted by rodderz

Can someone provide an example of this and how exactly it works. I've had 3 different explanations from 3 people.

You buy a motor vehicle before 31 December 2009 for business purposes. Assuming your business turns over $2M or less p.a, in your tax return for tax year FY2009 you can claim a $50,000 depreciation allowance (capped at $28,950 - being 50% of $57,180) as a one off bonus which is in addition to the depreciation you would ordinarily claim for that year.

The allowance drops to 30% if your turnover is more than $2.0M and vehicle must be purchased before 30 June 2009

So, in effect, over the lifetime of the vehicle you claim a total of up to 150% depreciation on the vehicle and your company, being on a 30% tax rate, gets $32,154 back from the government on a car it paid $57,180 for, assuming of course the vehicle is used 100% for business purposes.

What if the use of the vehicle changes from business to personal use?

If after having claimed the $50,000 one off depreciation allowance in FY2009 the vehicle is subsequently used for personal reasons (i.e it's no longer used in your business), my understanding is you're not compelled to pay back any of the investment allowance. However I'd be very careful here as the ATO compliance folk will be watching these claims like a hawk so if the car is transferred to personal duties one month after claiming the allowance that would ring alarm bells - expect to be audited.

However the standard depreciation deductions are all based on business useage, so once the business use stops so do the deductions.

Also, if say you're in the business of bricklaying and you claim the cost of a new Maserati as a business deduction I'd love to be a fly on the wall when you explain your story to teh ATO....A Super Pursuit Ute though, no problems

[Joe5619]

Originally Posted by JOHNNOSF6

Why should you be ****ed about it, bet you were happy as a pig in shiiit when you received your rediculus $900 bonus weren't you.

This idea is about stimulating the enconemy not about ****ing away money on personal items....The bonus helped me make a decision iv'e been tossing up on for a few months now, i bought 2 new peices of equipement and now will employ another 2 drivers to operate them. Thats another 2 guys working 60+ hours a week & paying tax on their $70,000-$85,000 a year, means i now have to pay workers comp & super on another 2 employees aswell. Thats also a substaincial increase in my turnover and hopefully profit margins so again they get another 33% of anything i make due to the extra work load iv'e just been able to pickup.

1. NO I was not happy to receive the 900 bonus.. What a complete waste a billions of dollars.. That could have built a road or a hospital or a school or a train line! Instead we got jack all from all that money!

2. What has you buying a piece of machinery got to do with a tax break on cars??

3. I thought the purpose of this tax break was to help the automotive industry, which brings me back to my question.. If you're bring to help the automotive industry why ignore private buyers? Other governments around the world that have tried to help their automotive sector have not ignore private buyers


Anyway, I can see I'm alone on this thinking, so not why about me

[GT0132]

Originally Posted by Joe5619

13. I thought the purpose of this tax break was to help the automotive industry, which brings me back to my question.. If you're bring to help the automotive industry why ignore private buyers? Other governments around the world that have tried to help their automotive sector have not ignore private buyers

For the same reason the government would never let individuals claim a tax deduction for depreciation on a new family home in times when there is a decline in the housing market and building companies are going broke.....Sure if they allowed that there would be an immediate demand for new housing , thus saving the building industry, but the financial burden on the government providing this funding (through a reduced tax base) would be tantamount to political suicide and a one way ticket to third world status

If you think the debt problem isn't bad now imagine what it would be like if the government allowed these sorts of lurks...........we just can't afford it....and if they did, we'd just be giving it back through higher taxes...My prediction is the GST rate will eventually increase to either 15 or 12.5% to cover the current revenue shortfall problem, let alone making it worse through what you're proposing.

The NZ government lifted the GST rate to 12.5% when they previously promised it would remain at 10, so what's stopping our government doing exactly that.

[xtremerus]

Originally Posted by Joe5619

3. I thought the purpose of this tax break was to help the automotive industry, which brings me back to my question.. If you're bring to help the automotive industry why ignore private buyers? Other governments around the world that have tried to help their automotive sector have not ignore private buyers

It is an equipment incentive that happens to include eligible motor vehicles, Not a car industry incentive on it own.

[flappist]

Originally Posted by Joe5619

1. NO I was not happy to receive the 900 bonus.. What a complete waste a billions of dollars.. That could have built a road or a hospital or a school or a train line! Instead we got jack all from all that money!

2. What has you buying a piece of machinery got to do with a tax break on cars??

3. I thought the purpose of this tax break was to help the automotive industry, which brings me back to my question.. If you're bring to help the automotive industry why ignore private buyers? Other governments around the world that have tried to help their automotive sector have not ignore private buyers


Anyway, I can see I'm alone on this thinking, so not why about me

You really don't get it do you.....

The tax credit is for capital equipment for use in a business to make money and therefore eventually pay more tax as well as possibly employ people who in turn will pay tax.
That capital equipment may be a car or computers or a phone system or airconditioning for the premisis or new tools or a dyno or whatever but it is to make money not spend it. It is not to help the car industry. The only reason cars are mentioned is that this is a car forum. On aviation fora they will be talking about aircraft, on computer fora about computers etc.

Giving YOU a tax break to buy a new car will do nothing except give you a new car. You won't work harder, pay more tax, employ people or help restore the economy.

If you want to take advantage of this then start a business and get a 50% tax credit. Of course you now won't get sickies, holidays any income when things are slow, workers comp, super, weekends off, flexi time, RDOs, public holidays...........

AND if you don't actually use the car for the business you will have to pay FBT so you are back to square one.

[AzuR]

Hey Guys

We spoke to our accountant about it, he explained the whole thing in an accountant type way and we translated into ok cool lets buy some new company cars, the time is right

If you are a small business earning under 2 million a year then give ya accountant a buzz and make sure you are good to go :

[buggerlugs]

Originally Posted by flappist

You really don't get it do you.....

The tax credit is for capital equipment for use in a business to make money and therefore eventually pay more tax as well as possibly employ people who in turn will pay tax.
That capital equipment may be a car or computers or a phone system or airconditioning for the premisis or new tools or a dyno or whatever but it is to make money not spend it. It is not to help the car industry. The only reason cars are mentioned is that this is a car forum. On aviation fora they will be talking about aircraft, on computer fora about computers etc.

Giving YOU a tax break to buy a new car will do nothing except give you a new car. You won't work harder, pay more tax, employ people or help restore the economy.

If you want to take advantage of this then start a business and get a 50% tax credit. Of course you now won't get sickies, holidays any income when things are slow, workers comp, super, weekends off, flexi time, RDOs, public holidays...........

AND if you don't actually use the car for the business you will have to pay FBT so you are back to square one.

" Oh , your self employed ? You must be making a fortune !! " I don't know how many times I have heard that............ Get of your **** and have a go then if being in business is so good.....And dont forget most people starting up a business have to borrow money usually against there house and risk everything..............