Home – New Forums Starting your journey new business vehicle the simple answer please

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  • #968150
    Kairtaka
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    My partner has a registered business and will be starting out soon in the landscape design field and she currently has a small privately registered car that would not be suitable. She would have to go into a HP or leasing contract to obtain a vehicle which would be suitable. The amount of hours / % of time in the 1st year is an unknown figure.
    We don’t understand all the technical jargon, I have tried to comprehend while reading some related posts. Can she buy a used vehicle for 20K and make it a deduction and what would be the minimum % of work related use? (or earnings/profit needed) As opposed to leasing a new car.
    She will be seeking out an accountant’s services soon, I am just gathering some initial facts.
    Regards Kairtaka with many thanks

    #1031226
    Farid Zaki
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    Hi Kairtaka,

    Your partner can claim a percentage % of all car expenses including depreciation (which is the cost of the car purchase spread over a number of years) of a used car. That % is determined by a log book that she needs to keep for a period of 12 weeks.

    If she decides to lease a new car instead, she then claim the lease payments instead of the depreciation plus all the other car expenses.

    If she decides to Hire Purchase (HP) she then claims the depreciation and interest paid to buy the new car.

    I assume that she will be doing more than 5000kms for business and she will keep all receipts for running expenses therefore be able to claim the car under the logbook method and the car cost will not exceed $57180.00.

    #1031227
    Avatar Consulting
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    Business planning is essentail

    Can I also suggest that a business plan is created so you have some idea of how the business will actually perform before investing too much money into it.

    A business plan will help answer the questions you raised, “Unsure of what usage the vehicle will get in the first year?”

    Using previous experience combined with research into sales projections enables the business owner to see how much use the vehicle will get.

    Clients I have in that industry use their vehicles almost non-stop, including up to 200km per day on average, with yearly counts in the 80,000km to 120,000km range.

    This needs to be researched to workout potential operating expenses so the business viability is known before large investments are made.

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