Home – New Forums Money matters Trusts and Motor Vehicles (GST) & FBT

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  • #987075
    Paul.G
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    We’re currently running our 2 small businesses as Sole Traders and looking to move to a Trust for a few reasons. We currently run a log book for the vehicles where we apportion private use (including GST). Unless I’m mistaken under a company/trust structure we have no option but to claim the full 100% of the MV expense each time (including the full input tax credit) and then work out our FBT liability for each vehicle? Presumably this would also mean that when we dispose of the vehicles we would have to include the full one eleventh of the trade in value (e.g. $11,000 (inc $1000 GST). I know the answer will be yes, but worth asking. I suppose the upside of a Trust structure would be claiming the full 100% claim for things like mobile phones, laptops, iPads and all other FBT exempt items.

    Also, I’m assuming the Trust formation costs would be considered Capital in nature? If so, can these be amortised?

    Sorry for all the questions. Hoping someone out there has the answers.

    Cheers PaulG

    #1161067
    TehCamel
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    Paul.G, post: 185918 wrote:
    Also, I’m assuming the Trust formation costs would be considered Capital in nature? If so, can these be amortised?

    Sorry for all the questions. Hoping someone out there has the answers.

    Cheers PaulG

    based on the records I have, yes, our trust costs were capitalised. whether or not they were amortised, I have no idea

    #1161068
    TheBusinessAccountant
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    Hi Paul,

    Yes, the costs of establishing the trust will be capitalised and amortised over a 5 year period.

    In relation to the motor vehicles, if they are owned by the trust then yes, as you say below you will claim 100% and the trust will be subject to FBT on the private use of the vehicles. However, if the vehicles are only driven by the business owners and not arm’s length employees, then rather than an FBT liability you may choose to simply do a Fringe Benefits Reimbursement back to your beneficiary loan accounts.

    I hope that helps. If you need further clarification please don’t hesitate to contact me direct.

    Thanks.

    Linda Robinson
    The Business Accountant
    http://www.thebusinessaccountant.com.au

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