Utes are Highly Tax Deductible
The deductions your business receives depend on the business structure.
Fringe Benefit Tax (FBT) on Utes is Deductible Too
Fringe Benefit Tax is applied to benefits given to employees in place of part-salary. There are exemptions in some cases for utes.
Utes Depreciate Slowly
Depreciation of vehicles for tax purposes can be claimed when used to produce taxable income. This is where the capital cost of the ute as an asset is spread over several years, based on an estimate of its useful life. Depreciation is the ‘decline in value’ allocated to each of the ute’s ‘useful life’ years.
The capital cost is usually the purchase price paid for the ute, plus stamp duty, delivery, and initial repairs or improvements. The best part is that if you can find a great value ute at below market cost, the market value may still be used instead.
Utes Have Great Resale Value
Utes are hugely popular as personal vehicles as well as business, and models that have been on the market for several years continue to hold their value well. Dual purpose twin cabs have enduring appeal with both family and trade buyers, due to their robust capabilities, solid handling and interior space. The manufacturer brands that hold most value are Ford, Mazda, Isuzu, Volkswagen and, of course, Toyota.
Depreciation on a new vehicle is usually highest in the first two years, with the value dropping off sharply in years 3 and 4. After that, the decrease is less steep. This makes the ute an extremely good prospect for businesses ready to sell after 4 years, and also for the business buying a lightly used ute.
Carsguide.com.au provides the following guidelines for depreciation. Clearly, the rate of depreciation will vary according to kms on the odometer, condition, nature of work the ute has been doing, etc.
Years after purchase |
Pickup & Cab Chassis 4x2 |
Pickup & Cab Chassis 4x4 |
1 year |
78.2-81.4% |
81.7-82.6% |
2 years |
72.7-92.5% |
74 -78.2% |
3 years |
63.4-93.1% |
64.5-101.9% |
4 years |
54.9-87.1% |
57.9-95.7% |
5 years |
49.2-77.5% |
54.7-80.9% |
Instant Write-Off Scheme
There is still time to benefit from the scheme announced in the 2014 Budget, enabling instant write-off on the purchase of utes bought up to a value of $25K, before the end of June 2017. See our earlier article for full details.
Ute Finance with 1800Approved
1800Approved provides vehicle loans for businesses wishing to invest in a ute, whether you are self-employed, a sub-contractors or apprentice, or sole trader or partnership. We can help you to locate a sound and reliable commercial vehicle. We will do all the history and mechanical checks, and make sure you are buying a legitimate vehicle from a legitimate seller. This leaves you free to concentrate on your trade and building a bold, bright future for your business.
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.