One consolation is you can claim that depreciation against your income. By the way, what type of car do you own? That's a huge drop.
Cash flow positive business cars!!!
- Thread starter JIT
- Start date
In order to claim the investment allowance you must be in business which means more than just having an ABN. Lots of people have an ABN and are not operating a business.
If you are a sole trader doing some IT work and using the car as part of your It business then you should receive the investment allowance. If you just have an ABN with a car and plan to offset it against your PAYG income then this is not possible.
Just wanted to clarify as you seem to think having an ABN makes a difference. Running a business makes the difference with the investment allowance.
If you are a sole trader doing some IT work and using the car as part of your It business then you should receive the investment allowance. If you just have an ABN with a car and plan to offset it against your PAYG income then this is not possible.
Just wanted to clarify as you seem to think having an ABN makes a difference. Running a business makes the difference with the investment allowance.
I have mostly PAYG income now, but I also have some ABN income from contracting work. In Feb next year all of my income will be on ABN from contracting. Will that pass??
http://www.westpac.com.au/internet/publish.nsf/content/PBCCCSCR+Holden+MasterCard
Can use it for a new SAAB or Hummer too.
How do you explain your previous comment about having already run a log book at 90% business use?
Fair question, but there's nothing "
" about it, it's just the nature of my work.That's most sensible, I may actually end up doing this after all, and buy a second hand car too!
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I thought that was the strength
!This 'concept' is about bringing gratification forwards by 5 years at little after-tax cost (for those 5 years).
I know the car is not a good investment and regardless of what car you have it will go down in value... unless it's some collectors item.
The major flaw is using up valuable equity, as already mentioned.
eg. 60k equity could be used for 1 X 400k RIP purchase at 90% LVR... which in 5 years time...
At my stage I don't have huge amounts of equity lying around, so this is the main thing I need to think about if I proceed with this.
Probably not!
Incorrect. A demo is sold as a New Car demo and correct it's first registered owner will be the dealership.
The majority of dealers will sell you the car inc of all on road costs including stamp duty and they will register the car in your name for you. In some instances if the car was a demo and had done over a certain amount of kms, then the car may be sold as a Used car
A used car is bought and you go to the Motor Registry and transfer the vehicle into your name yourself (most of the time)
I thought that was the strength
This 'concept' is about bringing gratification forwards by 5 years at little after-tax cost (for those 5 years).
Ok, I am starting to see what you are saying.
In addition to Tax benefits, due to inflation the $60k would be worth less in real terms in 5 years too.
Still dont think its something I would be doing though.
Are you doing IT contracting? If so, you will need to be especially careful to ensure that you pass the Personal Services test... are you using your own computer, are you working for a specific result, how much of income is coming from 1 entity.
If you don't pass the personal services test, then you would not be eligible to claim any car allowance to/ from your regular place of work, which could stuff up your planning. Our accountant has told us that 99% of IT consultants would fail the test if they were ever audited. and it doesn't matter if there are other people working in the company. We had a company, which was offering a range of services, most of which easily passed the test above. But the IT consulting area was always teetering on the edge of not passing.
So, also check that out before going ahead with your plan,
Cheers,
Pen
Thanks for your post Penny. I'm not in IT consulting, but I am aware of the PSI rules. I get my income from multiple sources and have clarified this with my accountant in the past. I will double check though.
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From here: http://www.treasury.gov.au/documents/1505/PDF/Frequently_Asked_Questions.pdf
Cheap motoring being the key word here. Been there and done that... but honestly, cars get so much better and more exciting than this kind of vehicle. Not to mention how any Holden/Ford is worth absolutely nothing after a few years. The supposed discount offered by a credit card can be matched/exceeded by just about any other car dealer. Really it's all perceived bargain rather than actual.
Update...
My enthusiasm for cars is waning as the ones I really like are well above the ''tax effective'' price point of 55-65k (around the luxury car tax threshold)!
I'm thinking of waiting till one of these more expensive new cars becomes ''used'' and loses 20% of its value and may buy one then.
Furthermore, losing valuable RIP equity at this point in my investing life is a bit too hard to palate for me at present.
To spell it out for those who haven't understood how CF+ve cars are possible without an income stream, it is due to the large 50% investment allowance tax deduction on top of regular depreciation tax deductions, and the financing of the car purchase with a low cost interest only loan (or cash upfront).
My enthusiasm for cars is waning as the ones I really like are well above the ''tax effective'' price point of 55-65k (around the luxury car tax threshold)!
I'm thinking of waiting till one of these more expensive new cars becomes ''used'' and loses 20% of its value and may buy one then.
Furthermore, losing valuable RIP equity at this point in my investing life is a bit too hard to palate for me at present.
To spell it out for those who haven't understood how CF+ve cars are possible without an income stream, it is due to the large 50% investment allowance tax deduction on top of regular depreciation tax deductions, and the financing of the car purchase with a low cost interest only loan (or cash upfront).
I have a Chrysler 300c for my limo business, It was about $64k on the road repayments of $1158 per month. I can't beleive people spend that sort of dough on their car a month, even if it was tax deductible. Yes it's a great car to drive, it was fun and exciting for months as I was only driving it a couple of days a week. Novelty wears off quick. I still get around in my ute that would be lucky to be worth $2k. But I can do a lot more with the $1158 a month.
Unfortunately a hyundai doesn't really cut it for a limo, and mine is the diesel 9l/100km running all around the gold coast. More if you do highway.
If I was buying a car that was worth that much I would want to have enough cash to pay for it outright and to have enough cash lying around that I didn't miss the $60 k I just paid out. I just couldn't bring myself to pay those sort of repayments a month on a car that, but hey maybe I am just a tightar*se
Unfortunately a hyundai doesn't really cut it for a limo, and mine is the diesel 9l/100km running all around the gold coast. More if you do highway.
If I was buying a car that was worth that much I would want to have enough cash to pay for it outright and to have enough cash lying around that I didn't miss the $60 k I just paid out. I just couldn't bring myself to pay those sort of repayments a month on a car that, but hey maybe I am just a tightar*se
