Company car?

[Orpheus1]

Bula all,

I am hopeful some of you tradies can help me with a question on a work vehicle.

We are starting up a cleaning and landscaping company and will need a work vehicle possibly two to move us around from property to property.

We will also need one of them for personal use.

So what i am after is what is the best way to write off all of it off including fuel, maintenance etc.

should we buy a truck with a tow bar and use this exclusively for work and then a little run about for the wife.
She will use hers as a company vehicle and also personal use so I think she will get up to 5000km
And I will use the work truck exclusively for work only but the business is also based from home so the IRD may be a bit reluctant on that.

So the question what do I buy to get the best outcome tax wise?

Thank you all very much! This site a good resource.

O

[Leftette]

Lease them? If you have personal use you'll have other tax issues - benefit in kind?

[Orpheus1]

Lease them? If you have personal use you'll have other tax issues - benefit in kind?

Thanks Leftette,

Can you elaborate a little as I'm just really thick when it comes to this sort of thing.

Cheers

[shanecarruthers]

Its fine to own the vehicle just charge all expenses of ownership at end of year if used 100% of the time, much easier then selling to company as there are other tax issues when you do that.

Accountant will be able to give you the best advice based on your circumstances.

[Maccachic]

Keep a log book for 3 months and then portion expenses accordingly you have to redo log book every so many years - find a good accountant and structure correctly from the get go.

[ScottSI]

We have company cars only. Some work only but can be driven home for storage. One available for personal use 100% of the time and we pay FBT at the end of the tax year - added back as income on the books, FBT is way less than the operation costs and you still get depreciation. You do need to see an accountant really - best money spent but do it now not the end of the tax year.

[Leftette]

FBT - that's what I was trying to think of. My accountant remarked that it only really works (with FBT) if the cars are relatively new. Once depreciated a fair whack, it's fairly pointless and won't save you any dough. At least leasing a car is a 100% expense - although I'm not sure what happens if you use leased vehicles for part-personal use. Ask your accountant.

[Rosco]

Bula all,

I am hopeful some of you tradies can help me with a question on a work vehicle.

We are starting up a cleaning and landscaping company and will need a work vehicle possibly two to move us around from property to property.

We will also need one of them for personal use.

So what i am after is what is the best way to write off all of it off including fuel, maintenance etc.

should we buy a truck with a tow bar and use this exclusively for work and then a little run about for the wife.
She will use hers as a company vehicle and also personal use so I think she will get up to 5000km
And I will use the work truck exclusively for work only but the business is also based from home so the IRD may be a bit reluctant on that.

So the question what do I buy to get the best outcome tax wise?

Thank you all very much! This site a good resource.

O

Hi O,

If you have true work related vehicles, then they are not liable for FBT. So if you have a true work van, or ute (not a passenger vehicle but a real work ute), or a Truck, then you will be able to claim 100% of the vehicle costs, including depreciation, and not pay FBT.

As to the vehicle that is some private and some business. There are a few options and here are two common ones
- own in personal names, and just claim % of expenses in Company based on log book (3 months sets % for 3 years). No FBT but also no depreciation
- Own in Company, and pay FBT. Can do this by physical payments or adjustment to income in financial statements, which works out very similar. Can claim 100% of all costs. FBT is based on vehicle value. So if cheap vehicle, under $20,000, often much easier to just own in company and account for FBT. Fringe benefit is set at 20% of GST inclusive value of vehicle. So if had $10k vehicle including GST, then getting $2,000 benefit, and pay FBT/tax of around $350 to $700 depending on tax rate. Note also GST adjustment on this.
If vehicle very expensive, say $100k, wouldn't normally put in Company if available for private use

Note test for FBT is available for private use, not used for private use. So if have passenger vehicle in Company, and it is available for your personal use, then liable for FBT.

Home storage can work in some cases, but also IRD can often see through this if it is a scam! Home office to work is normally considered personal use.

Ross

[Rosco]

Can't do FBT for shareholder vehicles if an LTC! IRD ruined a great little trick on this.

[spaceman]

You want to have the vehicle for personal use, yet write off all of the expenses????....tsk tsk....that would be naughty....shame on you.

Cheers
Spaceman

[Orpheus1]

You want to have the vehicle for personal use, yet write off all of the expenses????....tsk tsk....that would be naughty....shame on you.

Cheers
Spaceman

not sure how you got that from my post? If it came across that way it was a mistake.
i am simply trying to figure out the best and most tax efficient way to own or lease a company vehicle or two at most.
one would be a mixed use business/ personal and the second purely work vehicle.

i am open to paying cash, leasing, or whatever but just want to get it right the first time.

some great posts to point me in the right direction.

im am sure half the "company vehicles" in NZ are taking the piss a little bit so to speak but it's law and order every time for me!

cheers

O

[spaceman]

^ I got it from this....

We will also need one of them for personal use.

So what i am after is what is the best way to write off all of it off including fuel, maintenance etc.

It warms my heart to know that I was wrong and that you are an upstanding citizen.

I would recommend a read of "Pay zero taxes" by Peter Sibbald

http://www.fishpond.co.nz/Books/Pay-.../9780790010373

Cheers
Spaceman

[Orpheus1]

^ I got it from this....



It warms my heart to know that I was wrong and the you are an upstanding citizen.

I would recommend a read of "Pay zero taxes" by Peter Sibbald

[/COLOR]http://www.fishpond.co.nz/Books/Pay-.../9780790010373

Cheers
Spaceman

yup on the straight and narrow!
It should read write off all legal or allowable taxes etc.
the link is great and exactly what I was looking for- thanks.

cheers,

O

[BigBadWolf]

You should probably have your company buy the vehicles then factor in the FBT involved with using one for personal use into reducing your salary, same goes for things like mobile phones too.
The idea should be to reduce your personal expenses as much as possible, and your accountant will be able to advise you what else can be paid for by the company to reduce your personal household expenses.