4x4's and tax?
Submitted: Sunday, Jun 03, 2007 at 22:06
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V8Diesel
Howdy, I have a 100 series that is currently both commercially registered and insured. I have used this vehicle for work and claimed all expenses for tax purposes as I have been self empoyed.
I now have a new job which amongst other benefits provides me with a company car with private use included, so my trusty 100 series now resides out in the back shed gathering cobwebs.
My question is what is involved in transferring it back to so called 'private' usage in the eyes of the ATO? For the time being I would like to keep the 100 series for camping trips as it has $15K worth of
well sorted goodies on it and is in A1 condition, but what are the ramifications if I do sell it later on when I get that 4x4 auto TD company car I'm angling for? Do I still get a whopping tax bill on the discrepency between the actual selling and depreciated price, and also do I have to pay GST calculated on the purchase price of the Cruiser, or is the now 'privately' owned vehicle exempt and treated just as any other private car?
Naturally I will be seeing my accountant about this matter, but thought there might be someone out there who has some practical knowledge or advice about this kind of thing. I want to get the structure on place before the end of financial year for obvious reasons.
Does anyone else who has a company car have any advice in general? Have you kept your own vehicle or do you just use the company one?
Thanks in advance.
Reply By: Gerhardp1 - Sunday, Jun 03, 2007 at 22:43
Sunday, Jun 03, 2007 at 22:43
Not an accountant but my view is
If you sell the car to yourself, your business will have to pay the GST on the sale price.
If the book value is say 10,000 (which is GST exclusive because you claimed the GST originally) and you sell it to yourself at the market value of say $15,500, your business will pay $1500 GST, and your business profit on sale of the asset will be $5000, which will be taxable at whatever rate applies.
AnswerID:
244538
Follow Up By: Gerhardp1 - Sunday, Jun 03, 2007 at 22:45
Sunday, Jun 03, 2007 at 22:45
Oops, that GST figure on 15500 is wrong, too late at night :)
GST would be approx 908.95
FollowupID:
505520
Follow Up By: Gerhardp1 - Sunday, Jun 03, 2007 at 22:47
Sunday, Jun 03, 2007 at 22:47
Lets try again
If the book value is say 10,000 (which is GST exclusive because you claimed the GST originally) and you sell it to yourself at the market value of say $16,500, your business will pay $1500 GST, and your business profit on sale of the asset will be $5000, which will be taxable at whatever rate applies.
FollowupID:
505524
Reply By: Trekkie (Member - WA) - Sunday, Jun 03, 2007 at 23:54
Sunday, Jun 03, 2007 at 23:54
I asked my accountant the same question last Friday - a bit different to your ownership though - In my case the vehicle is owned by my company Pty Ltd. There are GST issues, CGT issues and State Stamp Duty issues.
Company will need to pay GST on the input
CGT will be calculated on the difference in selling price and written down value
State Stamp Duty also to be paid
Might leave it in the company - with FBT issues
FBT - CGT - GST - SD
You really have to question it all !!
AnswerID:
244556
Follow Up By: Member - Beatit (QLD) - Monday, Jun 04, 2007 at 11:01
Monday, Jun 04, 2007 at 11:01
Wait a little while and we can add carban tax as
well!
Kind regards
FollowupID:
505600
Follow Up By: Member - Beatit (QLD) - Monday, Jun 04, 2007 at 11:02
Monday, Jun 04, 2007 at 11:02
Oops that should be CARBON!
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505601
Reply By: Mikee5 (QLD) - Monday, Jun 04, 2007 at 13:11
Monday, Jun 04, 2007 at 13:11
I am amking 2 assumptions
1. you are a sole trader and
2. you claimed the full 10% input tax credit when you bought the vehicle.
If so you now have had a 'change in creditable purpose'.
What that means is when you bought it it was 100% business (and you would have kept log books to prove it of course) Now is is less than 100% business. What you do is pay back a bit of the original credit you claimed based on years of ownership, change of use and original purchase price. There is/was a fact sheet for this on the ATO web site.
It is a bit complicated so see your accountant.
I am a bit rusty because I left the ATO last year and this is straight out of my head.
AnswerID:
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Follow Up By: V8Diesel - Monday, Jun 04, 2007 at 16:39
Monday, Jun 04, 2007 at 16:39
Thanks for the help.
Yes I am a sole trader.
Now here's the messy one. I bought it privately so no GST. Where does that leave me?
FollowupID:
505673
Reply By: Mikee5 (QLD) - Monday, Jun 04, 2007 at 18:39
Monday, Jun 04, 2007 at 18:39
Because there was no GST in the purchase price, you would not have paid any GST to the tax office when you bought it. Now that there is no business use when you sell, there is no obligation to include GST in the sale price - makes it simple. If you were still using it 100% for business when you sold it you would have to give 10% of the sale price to the ATO.
Mike.
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