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?

[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

[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

[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.

[Elks]

Originally Posted by SE Ute

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.

It comes back to whether the car yard depreciated to vehicle or not. If they have made a claim for depreciation on the ATO, you can't. This avoids double dipping. I don't know of a dealer who would do that.

If the car yard has not depreciated the vehicle to the ATO (the normal situation) the vehicle is treated as new stock under the legislation considered "new". The ATO does not care if someone got their lunch in it they just don't want to pay twice.

[SE Ute]

Originally Posted by myts

It comes back to whether the car yard depreciated to vehicle or not. If they have made a claim for depreciation on the ATO, you can't. This avoids double dipping. I don't know of a dealer who would do that.

If the car yard has not depreciated the vehicle to the ATO (the normal situation) the vehicle is treated as new stock under the legislation considered "new". The ATO does not care if someone got their lunch in it they just don't want to pay twice.

This is from the explanatory memorandum to the Tax Laws AMENDMENT (Small Business and General Business Tax Break) Bill 2009


Further, an asset will still be considered to be new if it has only been used for the purposes of reasonable testing and trialling (by any entity). [Schedule 1, item 4, subsection 41-20(2)]

Example 1.5

Belinda is contemplating the purchase of a ‘demonstrator’ vehicle from a dealer for $25,000 to use in her business. Although the dealer had acquired the car new from the factory, he would regularly use the car to drive to and from work. The prior use by the car dealer does not constitute reasonable testing and trialling of the car. Therefore the car is not considered new and Belinda would not be eligible to claim the Tax Break for the car.
http://parlinfo.aph.gov.au/parlInfo/...6a722%22;rec=0

[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.

[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.

[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.

[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..............

[Joe5619]

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.

NO, YOU DONT UNSERSTAND MY POINT... I get how this works, I'm an accountant!! I don’t care what the method is of proving a hand car, my point is the incentive (as I thought it was) was to help the Motor industry, not the economy in general but specifically the motor industry.. And this is why I can't understand why they have ignored private buyers.

[ILLaViTaR]

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.

I agree it's wrong.

Our neighbour owns a trade business, he made his wife assistant director of the company.
She's a housewife and contributes nothing to the business AT ALL, the husband does everything.

But because she's titled assistant director she gets to claim a BMW which is somehow essential for a bloody window company. While he drives a Holden Grange.

Whereas my father pays something near 40k in tax as an employee. Travels on the train every day full time and cannot even claim his damn trips to and from work. The only thing he can claim is $500 back on his PC which work needed him to purchase anyway.

Don't see why next door gets exempt from carry their own weight when it comes to transport. Not only that, they get a bloody car as well!

[GT0336]

Originally Posted by ILLaViTaR

I agree it's wrong.

Our neighbour owns a trade business, he made his wife assistant director of the company.
She's a housewife and contributes nothing to the business AT ALL, the husband does everything.

But because she's titled assistant director she gets to claim a BMW which is somehow essential for a bloody window company. While he drives a Holden Grange.

Whereas my father pays something near 40k in tax as an employee. Travels on the train every day full time and cannot even claim his damn trips to and from work. The only thing he can claim is $500 back on his PC which work needed him to purchase anyway.

Don't see why next door gets exempt from carry their own weight when it comes to transport. Not only that, they get a bloody car as well!

One of the benefits of putting everything on the line and starting your own business. Your neighbour also has to pay his own super and doesnt get the liberty of paid sick days, holidays etc.

[JBomb3000]

Originally Posted by GT0336

One of the benefits of putting everything on the line and starting your own business. Your neighbour also has to pay his own super and doesnt get the liberty of paid sick days, holidays etc.

Agree 100% if you want all the benefits then put your nuts on the line and start your own business.