$20K Instant Asset Write off - Buying a 2nd Hand Car through a Private Seller

Hey!

I am exploring whether we can take advantage of the 20K instant tax write off by replacing our family car.

My partner would use it 3 days a week for travelling to see her clients in the CBD and we are aware that we would only therefore claim against 43% of the value.

Her business is not registered for GST so the maximum value of the car we can look to buy is $19,417.48 + stamp duty @ 3%.

If we found a privately advertised car close to - but above- this amount and could not get them to the above magic number, what is to stop us from having the owener receipt the car to that amount and then paying them a side amount to the difference? I am not saying we plan on doing this at all, but am curious to know having never bought privately here if there is anything other than good morals preventing this.

Thank-you in advance.

Comments

  • +30 votes

    Hi everyone,

    I intend to commit tax fraud which will ultimately end up coming out of your pockets, thoughts?

  • +2 votes

    Why not check with your tax accountant, who should tell you the % actually depend on distance traveled for business and personal use of the car in a 12 weeks period (logbook method) instead of days the car available for business use.

    •  

      Hey - yes, spoke with the accountant who mentioned the logbook method. Definitely something we would do.

  •  

    The only legitimate answer you can get here is to check with your accountant. My understanding on it is you can only claim the percentage it is in use. So if it is used for 60% of the time, then you can only claim 60% of the value, as described here and does not include a car that is used to travel to a client. It needs to be used to transport tools as well.

    Don't commit to anything though until you seek professional advice from a qualified accountant

    •  

      According to the ATO website you can claim car expenses for the below - which describes what my wife has to do (she works at her clients office for a lot of project based work and our home is her normal workplace):

      "you can claim if you travel from your home to an alternative workplace and then to your normal workplace or directly home (for example, if you travel to a client's premises)"

      https://www.ato.gov.au/individuals/income-and-deductions/ded...

      just pasting the link in case this helps other people better understand what they may be eligible to claim…or at least discuss with their accountant.

      • -1 vote

        That link only validates my statement.

        "If the travel was partly private, you can claim only the work-related portion."

        If it's only being used 3 out of 5 days, you can only claim 60% back

        •  

          I think we're both on the same page then, although I was thinking if it's for personal usage too it would be based on 7 days rather than 5 i.e so 3 out of 7 days and so only 43%. Either way, this would all have to be tracked by a logbook to properly represent the business usage.

          Thank you for your responses

        •  

          @barbienewb:

          3 out of 7 days and so only 43%.

          Ahh yeah, that's a valid point. I wouldn't even plan on doing this without seeing an accountant. There's ways this can go bad if not properly calculated correctly. I'd be bound to stuff it up!

  • +1 vote

    Short answer is yes - you can do that. If the the seller agrees.

    Best to keep it to a small amount… you'll have someone else coming to look for there missing duty if it looks too suss.

  •  

    replacing our family car.

    does your partner have another vehicle which she is the registered operator?

  •  

    now we know your plans, you cant do it.

  •  

    End of the day, the tax etc will probably be worked out on the receipt value - which was obtained fraudulently.

    But, assuming you are only claiming for a portion can you legitimately claim the portion on a portion of the receipt value? That would not be fraudulent.

    •  

      Yea - it's a good question, but regardless of the % business usage the total value must not exceed $20K. Assets costing $20K or more can be allocated to a pool and depreciated at a rate of 15% in the first year and 30% for each year thereafter.

  •  

    If your wife only works at her clients office and your home she can not claim at all.If she is travelling between various clients she can.

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