Claim Vehicle Repayments As Tax Deductions With A.b.n?

[mattxr6tute]

Just wondering, as I work as a sparky fulltime for an employer, and have a work vehicle mon-fri, I'm getting an abn next year and working 1-2 days a week on weekends,.. just wondering if I get a loan few a new Ford once I have my business set up, can I claim the repayments as a tax deduction, if say the work usage is 90% and personal use 10%, does that mean I can claim 90% as tax decuctions?? and also, does that go the same for claiming rent if my primary residance is for work depot/office??

[KeepLeft]

Dude.. get an accountant. You don't want to be making mistakes about stuff like this as the ATO is a major pain in the arse.

The summary is: If you're doing a lease then you can claim the complete repayment. If you're doing a loan or chattel mortgage then you can only claim the interest component of every repayment. They usually use the rule of 72 to work out how much that is. Of course you can only claim the percentage you use it for work, like 90%. You need to have at least 5 consecutive weeks of complete log books (every single tiny trip) that is then used to work out the actual percentage of business use.

[mattxr6tute]

Dude.. get an accountant. You don't want to be making mistakes about stuff like this as the ATO is a major pain in the arse.

The summary is: If you're doing a lease then you can claim the complete repayment. If you're doing a loan or chattel mortgage then you can only claim the interest component of every repayment. They usually use the rule of 72 to work out how much that is. Of course you can only claim the percentage you use it for work, like 90%. You need to have at least 5 consecutive weeks of complete log books (every single tiny trip) that is then used to work out the actual percentage of business use.

Thanks man.. haha yeah I have got an accountant mate I'm going to speaking to in person within the next few weeks about it all, just figured this would be a good place to get a heads up as I assume a few people in here would have their business set up. When you say a Lease, how do you go about getting a lease? And who do you lease the vecihle from? that could be an idea, but that would mean you'd be getting a few vehicle every few years or so hey?

[KeepLeft]

One more thing.. I'd recommend doing the maths (of getting the account to do the maths) to see whether a chattel mortgage, hire purchase or lease will save you the most amount of tax. There's plenty of options out there for finance. Ask any dealer or bank or search on the net for a vehicle finance broker.

[Macktheknife]

There are lots of ways, the one that has worked well for me is:

I'm a sales rep & take a vehicle allowance instead of a company vehicle.

I did a log book for 6 months that gave me a 97% business use figure but I only claim 95%. (just to be safe)

I use a chattle mortgage so I claim the total interest paid per tax year.

Then, I claim 95% of every other item for the car. Everything! even 95% of licence fees etc etc.

Then, you also claim the depreciation which I understand is a fixed componant that your accountant will know.

Seems to help get me a healthy refund every year. And mate, just make sure you have reciepts for anything claimed.

[Never had any say Panda]

Mack are you doing your tax returns yourself? I get an allowance for vehicle usage also (only about 65% of the vehicle km's). My work reimburses me at a rate of 75c/km for travel. I pay fuel etc. My accountant told me I can't claim vehicle expenses as a deduction as I'm technically already being reimbursed for all those expenses as 75c/km is well above just a fuel reimbursement?

If you're using an accountant.. I'm getting a new one..

[tab]

Is your reimbursement excluded from your taxable income?

As for the OP as previously advised speak to an accountant before you do absolutely anything. There are allot of misconceptions out there along the lines of people assuming that a business expense is a direct refund of tax, when that's never the case as the best it can be is a reduction on your taxable income and therefore the only 'gain' you can get is whatever your tax rate is.

The ATO is far from charitable and like to overcomplicate everything, hence the need for nerdy beencounters that have a grasp on it all.

[SuckSqueezeBangBlow]

when I was renting I was claiming 33% of my rent and electricity as a deduction. 100% of broadband.

I'm also a sparky, earning good money but I prefer my 7 year old hilux and have the XR6T as the family car.

If you are only working 1 or 2 days a week for your own business then you want to make sure you really think its worth buying the ford as a work vehicle (I wouldn't: work vehicle to me means a rig you don't mind getting scratched from time to time, trust me it will happen) as you can only claim on the income from that business.

Find out what the weekly repayments are and do the math with what you anticipate earning. 1 to 2 days could be around $2k before expenses?

Edited 30/09/11 10:26 AM by JC807

[Never had any say Panda]

Is your reimbursement excluded from your taxable income?

....,.,.

The ATO is far from charitable and like to overcomplicate everything, hence the need for nerdy beencounters that have a grasp on it all.

Yeah it's a reimbursement and as such isn't part of our taxable income. Either way I can't really complain about it because a 3000km trip is awesome for the bank balance when it only uses about 450 in fuel. A lot of people do make the mistake thinking that tax deductions are taking that whole amount off the total tax payable not just altering your taxable income..

Oh and I know the ATO ain't charitable my bloody mother works there..

[STAINLESS again plz]

Chattel mortgage. Claim the gst straight up and spend it on mods. Or use it to pay your first qtr.