Company Car Allowance - what's the best way to manage it?
Discussion
Hi all,
Need some help please. My wife has just been offered a job that comes with a $20k car allowance. However, we're just not sure of Aussie rules on such things - please see the following questions
1. Does a car allowance usually cover petrol expenses as well, or is petrol claimed separately? If so, do you claim it from your company or against your tax return? Or both?
2. She will start the job in January, so half way through the tax year. We're presuming the car allowance would be pro-rata-ed over the year, so we're expecting only to get $10k in the first financial year (Jan - Jun 2011). Would this be right?
3. She will be doing a fair few business k's, probably 70% business, 30% private, so initially a novated or corporate lease would have seemed like a good idea (especially as she's only ever had company cars, so hasn't got a no-claims bonus). However, we're planning on having bubs no 2 at some point in 2012, so we're reticent to get into a lease and then have high repayments when she's on maternity leave with no income. We're therefore thinking that it would be best to buy a car ourselves - do you agree?
4. Say we bought a second hand Mondeo (her choice
), at about $25k. Then insured it at a cost of c. $1200 per year, plus rego, servicing etc etc. Assume it came to a total of $30k in the first year, then $5k per year after that. How can we offset the most tax? Clearly, the first year would be the one with the biggest outlay (as it's the one in which we'll buy the car), but she's only going to be working 6/12 months in the 2010-11 tax year, so the tax offset benefits would be less? In the second tax year, what can we offset to make it more efficient? I think depreciation? Servicing costs etc?
5. I'm going to be setting up my own business on arrival in Australia - would we be eligible for an associate lease where I buy the car and lease it to her? What are the tax benefits for us (both her and my business) by doing this? Can she pay the monthly 'rental' charge directly, or does her company have to administrate it so it comes out of her pre-tax income? Can I offset the capital cost of the car against my tax? I heard there was a small business rebate on offer last year that could be used against cars - is that still around?
6. Are there other cars that might be better than Mondeos expenses/fuel efficiency/safety wise? In the UK she currently drives a BMW 320d, before that it was an Audi - so she likes solid family cars (esp considering before too long we'll have 2 kids = 2 carseats). Her only pre-requisite is that she will not have a Holden. We definitely want a second hand car, but we're finding it hard to compare cars UK to Aus, there seem to be a lot of models in Aus that we don't have in UK.
As I said, any advice very gratefully received - thanks all!
Need some help please. My wife has just been offered a job that comes with a $20k car allowance. However, we're just not sure of Aussie rules on such things - please see the following questions
1. Does a car allowance usually cover petrol expenses as well, or is petrol claimed separately? If so, do you claim it from your company or against your tax return? Or both?
2. She will start the job in January, so half way through the tax year. We're presuming the car allowance would be pro-rata-ed over the year, so we're expecting only to get $10k in the first financial year (Jan - Jun 2011). Would this be right?
3. She will be doing a fair few business k's, probably 70% business, 30% private, so initially a novated or corporate lease would have seemed like a good idea (especially as she's only ever had company cars, so hasn't got a no-claims bonus). However, we're planning on having bubs no 2 at some point in 2012, so we're reticent to get into a lease and then have high repayments when she's on maternity leave with no income. We're therefore thinking that it would be best to buy a car ourselves - do you agree?
4. Say we bought a second hand Mondeo (her choice
), at about $25k. Then insured it at a cost of c. $1200 per year, plus rego, servicing etc etc. Assume it came to a total of $30k in the first year, then $5k per year after that. How can we offset the most tax? Clearly, the first year would be the one with the biggest outlay (as it's the one in which we'll buy the car), but she's only going to be working 6/12 months in the 2010-11 tax year, so the tax offset benefits would be less? In the second tax year, what can we offset to make it more efficient? I think depreciation? Servicing costs etc?5. I'm going to be setting up my own business on arrival in Australia - would we be eligible for an associate lease where I buy the car and lease it to her? What are the tax benefits for us (both her and my business) by doing this? Can she pay the monthly 'rental' charge directly, or does her company have to administrate it so it comes out of her pre-tax income? Can I offset the capital cost of the car against my tax? I heard there was a small business rebate on offer last year that could be used against cars - is that still around?
6. Are there other cars that might be better than Mondeos expenses/fuel efficiency/safety wise? In the UK she currently drives a BMW 320d, before that it was an Audi - so she likes solid family cars (esp considering before too long we'll have 2 kids = 2 carseats). Her only pre-requisite is that she will not have a Holden. We definitely want a second hand car, but we're finding it hard to compare cars UK to Aus, there seem to be a lot of models in Aus that we don't have in UK.
As I said, any advice very gratefully received - thanks all!
TVP993 said:
6. Are there other cars that might be better than Mondeos expenses/fuel efficiency/safety wise? In the UK she currently drives a BMW 320d, before that it was an Audi - so she likes solid family cars (esp considering before too long we'll have 2 kids = 2 carseats). Her only pre-requisite is that she will not have a Holden. We definitely want a second hand car, but we're finding it hard to compare cars UK to Aus, there seem to be a lot of models in Aus that we don't have in UK.
As I said, any advice very gratefully received - thanks all!
I can't help you on the rest but a Mondeo would be a fine choice of car, still quite rare here so I think they might hold value. They do an XR5 version which has the 5 cylinder turbo engine from the Focus ST / XR5 in it.As I said, any advice very gratefully received - thanks all!
I wouldnt be to quick to bin the idea of a Commodore or Falcon. They are 5 star safety cars now and you will never have a problem with support or getting the thing fixed or insured. The latest gen Falcon is actually a very nice place to be and come well equipped from factory. I think you would need to drive one though as they are BIG cars.
Diesel is just starting to take off here so there is a good range of Focus sized hatch backs to be had if you don't fancy a petrol car.
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