Is this all above board?

[AgentMail]

Up

0

::

My common sense tells me this is ok, but just want the FS community opinion….

I have a car in my personal name which has just finished it’s finance. Our business is in need of a vehicle, and rather than purchase another car (mine doesn’t get used at present as baby seats or in the wife’s car), I wanted to get the business to buy it from me.

My intention was to use the Redbook guide to ensure a fair market valuation (i.e. not overvaluing it) and then for my business to buy it from me, just like it would if it was buying a car from anyone else.

I was just concerned there may be some issue, because I own the company, and own the car in my private name – I am being too paranoid?

[Past-Member]

Up

0

::

If you are a sole trader and own the car in your own name, then you cannot sell the car to your business. I don’t know about other business setups. However, you can claim business use and expenses however, but you must keep a 12 week log to show usage apportioned regardless. Any business trip from your home office is deductible. For me, I use my car so little now that my percentage dropped from 90% to 45% usage. Eg when I put in petrol expenses for the month I put 45% of the amount as business, and 55% as personal. $100 would be $45 deduction and $55 as personal drawings.

[AgentMail]

Up

0

::

Sorry, I should have mentioned we are a pty ltd company, so is completely separate from tax perspective to our personal tax returns

[Jason@Plumsale]

Up

0

::

This is governed by ASIC, and is called related party transactions. From what I have read in the past, you need shareholder agreement before you make the transaction. You will have to seek professional advise as to the exact process to make that transaction.

[James Millar]

Up

0

::

AgentMail, post: 174709 wrote:

Sorry, I should have mentioned we are a pty ltd company, so is completely separate from tax perspective to our personal tax returns

Yes you can do it. The only issue is that you will probably need to pay stamp duty to your state road authority when you transfer ownership and registration to the company. There will be no GST input tax credit in the company on its acquisition (because you are not selling it with a tax invoice).

Adjust in the company for any private use or pay FBT.

No major issues with the Corporations Act unless you have other shareholders that may be adversely effected by the transaction. Unlikely given that you are increasing the asset base of the company on an unsecured loan basis (your directors credit loan account will increase). If the company were to purchase the car at an inflated value that’s a different story. You can’t depreciate assets acquired at an non commercial value. All of these issues are rare in a small closely held Pty Ltd company.

Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900

[Author]

Posts