Hi all,
I drive alot for work, 35,000km per year, I have previously just used the car I own but the company has recently bought in a new car policy that my car does not meet. Safety rating/ years old.
I receive a car allowance and a fuel card, I am in the process of buying a new car and would like to make my allowance work for me and claim as much of my allowance back come tax time.
What sort of finance options would you guys recommend?!
Thank you.
I have a chattel mortgage on my car.
I'm guessing you're self employed. The main benefit of a chattel mortgage is that you can claim an GST input credit for the full value of the car, without having paid the entire amount.
Nothing wrong with it, but probably not the best option if you're a regular PAYG employee.
No I am not self employed. I am PAYG
Prior to changes, I always did a hire purchase loan but that attracts GST now so switched to chattel mortgage
https://www.strattonfinance.com.au/car-finance/learn/article…
https://www.ato.gov.au/Business/GST/In-detail/GST-issues-reg…
No I am not self employed. I am PAYG
How does you car allowance work? Do you buy the car in your personal name or does your employer buy it and let you drive it?
If you bought it in your personal name with a chattel mortgage, how did you claim the GST on the purchase of the car?
You're probably better off with a novated lease, than a CHP or Chattel mortgage, if the car is in your name.
@sp00ker: because as I stated in a previous post above I sat down with my accountant and he said in my circumstances a chattel mortgage is better.
he said in my circumstances a chattel mortgage is better.
Sure, a chattel mortgage is better than a CHP … but in your situtation you don't need 'commericial finance'. You probably would be better off with consumer finance, eg a car loan or money from offset account.
There's more competition in the consumer finance and there's better protection laws.
The finance option you choose doesn't change what you can claim in depreciation and tax… you need to get a new accountant (or get him to explain the options to you better).
@chumlee:
Cheers, my friend works at Stratton and he indicated Chattel would be the best for me. Most other employees lease. But my company doesn't do novated leasing.
$80k investment car? That should depreciate enough over the course of a few years.
How generous is your allowance and what's your salary like?
This is an entry level engineering role, $55K + $15 car allowance or thereabouts.
My old man's an engineer. He's got a $22k car allowance but no fuel card anymore (but gets $450 for petrol a month on top of the car allowance - needs receipts to claim). In the past he used to buy a reasonably sized sedan as close to the $22k mark as possible, then claim as much as possible on running costs and servicing in the subsequent years. Now he just buys whatever he wants and sees the $22k allowance as loose change.
What sort of finance options would you guys recommend?!
Probably need to know the amount of your car allowance, marginal tax rate and does your employer allow novated leases?
Your vehicle for work situation is almost identical to mine. I have a chattel mortgage on my car.
I went through all this with my accountant some years ago and any finance option is fine it just depends how you want to structure it. With a chattel mortgage you get a good amount back on tax in the first fews years due to depreciation, whereas with a car loan it's a more even spread over a longer period.