When you set up a business, you clearly want it to succeed. Yet as in other areas of life, it’s all too easy to allow enthusiasm and excitement to rule what should be a very rational decision – which commercial vehicle to buy for your business.
How much these benefit the business, however, depends on the efficiency offered by their combined capacity, function and distance travelled per financial period. If you buy without being aware of all the issues involved, you risk losing a serious amount of money before the first year of ownership is out.
The ATO gives GST credits for new vehicles and expects GST to be accounted for on vehicle sales. There are different ways to make the purchase and these will have different impacts on the business plan and your tax benefits.
The cost of running a vehicle is as important as its purchase cost. Your business plan should include insurance, servicing, maintenance, repairs, driver training, etc, as well as a contingency amount for the unexpected event, such as an accident.
Tax allowances are available depending on the depreciation (decline in value) rate of the commercial vehicle over its useful life. There are also specific tax benefits are tailored to suit certain classes of vehicle, particularly in relation to reducing emissions. In Australia, these include incentives for owners of trucks that are more environmentally friendly in the form of fuel efficiency credits.
If you own a registered small business, this is an excellent time to buy a commercial vehicle, as you can reclaim an instant tax deduction of around $6,000 on a $20,000 new vehicle purchase made before 30 June 2017. Our advice is to get good business advice before you make any decision, as your business can only benefit from additional input.
Are you looking for finance to help you purchase a new vehicle? 1800Approved is one of Australia’s fastest growing car and asset finance brokers. We specialise in car finance, equipment finance, plus insurance and warranty services, and have previously arranged deals from AU$10k to AU$5m. 1800Approved services clients across Australia, working with over 30 independent lenders to find the best deal.
We can also help with sourcing your new and used car warranty, and by sourcing vehicles and equipment through our Drive Wholesale arm.
To learn more about how we can help you, call us today on 1800 277 768.
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