My company is thinking of buying an EV. The company is registered for GST and it will be used 100% for private use to me who is also an employee. I have written down how I think it works.

Can someone confirm that what I have written is basically correct or tell me what assumptions or calculations are wrong.

buying 50,000 EV
Purchase is an instant tax right off?

cost car 50,000
GST 4,545 ( refunded in BAS)
actual cost 45,455

small company tax rate is 25%
tax saved 11,363

So the real cost to me is 34,092

ie tax payable on profits is reduced by 11,363
if I don't make more than 45,455 profit (11,363 tax) then it is a loss and can be offset in future tax returns against profits?

In my income tax I need to declare what the Fringe Benefits Tax (FBT) would be. In this case $9972 from ATO FBT calculator using the Statutory Method. This increases my Medicare levy but no other effects.

extra Medicare (2%) $199

This would continue yearly. I am assuming this would reduce but not too worried about this.


After 3 years I decide to sell and assume sell price has reduced 40%. (not typical for last 3 years)

ie sell it for 30,000.
I assume I need to pay GST of 2,727
so receive 27,273

Do I make a capital loss of 18,182 ?
that can be offset against future capital gains. It feels like double dipping as we already have saved 11K in tax.

If the motor vehicle is used for 100% personal use, you can not claim a company tax deduction.

A conversation with your tax accountant is what you need, not an internet forum conversation.

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kb53 said..
Can someone confirm that what I have written is basically correct or tell me what assumptions or calculations are wrong.

buying 50,000 EV
Purchase is an instant tax right off?

"write", not tax "right" off.

Glad I could be of internet forum assistance.

Oh, and don't forget to hit that like button. As to the rest, ...no idea.

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UncleBob said..
A conversation with your tax accountant is what you need, not an internet forum conversation.

I am trying to get an understanding of what is and isn't allowed before asking a "registered" tax accountant. Only fools take any advice at face value whether from an internet forum or paid advice. Anyway here is a second hand account from a mate (so hope is accurate) who had a registered tax accountant prepare his tax return. He was working and was sacked half way through the year. He was also doing a course that so called accountant said could be written off against his income. Anyway mate gets audited and has meeting with ATO. Accountant was allowed to attend and not speak. They tell my mate he is responsible for his tax return - not the accountant. Short story - he could claim the course while he was working. When he was sacked he couldn't claim. He gets fined etc - accountant just looks stupid. So yes a conversation with a tax accountant is good but you also need to know the relevant rules yourself.

The ATO helpline is surprisingly helpful, once you get the right person on the other end of the line. They also have zero qualms about confirming the ability to double dip where your circumstances allow you to. They are simply interested in advising how to follow the letter of the tax law, no matter how ridiculous it might be in some cases. As you say, you are responsible, not your accountant, which is why I've gone straight to the source for advice the couple of times I've had an unusual tax situation.

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kb53 said..
Short story - he could claim the course while he was working. When he was sacked he couldn't claim.

So what makes you think you can claim all these tax benefits for your company for a car that is 100% for personal use?

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kb53 said..

UncleBob said..
A conversation with your tax accountant is what you need, not an internet forum conversation.

I am trying to get an understanding of what is and isn't allowed before asking a "registered" tax accountant. Only fools take any advice at face value whether from an internet forum or paid advice. Anyway here is a second hand account from a mate (so hope is accurate) who had a registered tax accountant prepare his tax return. He was working and was sacked half way through the year. He was also doing a course that so called accountant said could be written off against his income. Anyway mate gets audited and has meeting with ATO. Accountant was allowed to attend and not speak. They tell my mate he is responsible for his tax return - not the accountant. Short story - he could claim the course while he was working. When he was sacked he couldn't claim. He gets fined etc - accountant just looks stupid. So yes a conversation with a tax accountant is good but you also need to know the relevant rules yourself.

And, mate you are not going to find the "relevant rules" here.

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myscreenname said..

kb53 said..
Short story - he could claim the course while he was working. When he was sacked he couldn't claim.

So what makes you think you can claim all these tax benefits for your company for a car that is 100% for personal use?

Maybe I am wrong but I think it works like this. The company can buy a car, claim back GST and can claim the cost of the car against income. As long as it is not used privately or only for business then everything is OK. However if the car is used by the employee for private purposes once or every day and not for the company then the company needs to pay a Fringe Benfits Tax at the top marginal rate of 47%. And you need to do this yearly. So unless your rich it doesn't make a lot of sense.

However the ALP is in the process of passing a bill that exempts electric vehicles from paying FBT.

So normally the entity that needs to pay the FBT is the one that can claim the tax benefits. In this case the FBT is waived but you still need to submit FBT paperwork. This is why you see articles claiming how employees can save $9K a year under this new EV FBT legislation but no one mentions how it works!

Google "EV FBT" and there are endless references.

Maybe the figures in this one help?
www.salarypackaginggurus.com.au/news/potential-fbt-exemption-electric-cars

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kb53 said..
Maybe I am wrong but I think it works like this. The company can buy a car, claim back GST and can claim the cost of the car against income. As long as it is not used privately or only for business then everything is OK. However if the car is used by the employee for private purposes once or every day and not for the company then the company needs to pay a Fringe Benfits Tax at the top marginal rate of 47%. And you need to do this yearly. So unless your rich it doesn't make a lot of sense.

However the ALP is in the process of passing a bill that exempts electric vehicles from paying FBT.
So normally the entity that needs to pay the FBT is the one that can claim the tax benefits. In this case the FBT is waived but you still need to submit FBT paperwork. This is why you see articles claiming how employees can save $9K a year under this new EV FBT legislation but no one mentions how it works!

You don't need to convince me. But, I think you are dreaming if you think your buisness can legally claim tax advantages on any asset that is of no benefit to your company.

I think because you claimed and wrote off the purchase price the sale price is all profit. Like you had depreciated it down to zero.