Home – New Forums Money matters Can I buy asset costing $6.500+ using company money

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  • #983849
    George Petrovic
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    Can I spend company cash to buy asset worth more than $6,500? If “no” how this can be done (bank loan)?

    #1144583
    TehCamel
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    I think this would greatly depend on the asset you were trying to purchase, what you wanted to purchase it for, who the owner of the asset would be, and what the company policy is on things like this.

    I know that, as company director of our company, I could go out and buy the company a new server to replace an old one, with a cost value of $15,000.
    That asset would be owned by the company, and depreciated as a capital asset.
    This is perfectly ok, assuming I have the cashflow to pay for it, or a line of credit, or a director loan, or some other legal way of funding it.

    If, however, I decided as company director that I wanted a new couch for my house, I couldn’t go out to Harvey Norman and buy a 5,000 couch with company money.

    best speak to your accountant.

    #1144584
    Elite Tax Solutions
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    Hi George,

    If you are the director of the company and purchasing the asset for company purposes, you can definitely use your company cash for it.

    But if the item you are to purchase are for private usage, as per TehCamel, eg. couch for your own house you are not suppose to use your company cash.

    By saying that though, if you are the sole director of the company, you might have the authority to use your company money if you are to record it properly in your company books. There are a few ways of recording it.

    1. Issue a director fees to yourself for amount spend on private items. It would lead to a deduction on the company and income on your personal tax return.
    2. You need to treat the amount spend as Div7A. The information should be on this link. http://www.ato.gov.au/Business/Division-7A/In-detail/Fact-sheets/Division-7A—Interposed-entity-transactions—Payments-and-loans/

    Hope this will helps.

    Kind Regards,

    Willie Chung CPA
    Elite Tax Solutions
    W : http://www.elitetaxsolutions.com.au
    E : [email protected]
    P : 07 36375588

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