Car Allowance

[Never had any say Panda]

Wowee.. Yeah I just checked ours wasn't a car allowance it was mileage allowance.. Definitely a lot less complicated..

If we did trips to the airport we just expensed the parking cost back to the company.. Then got reimbursed parking + mileage to and from..

With a company car I just get reimbursed for parking.. So much easier..

[sexual harrassment panda]

company car + company credit card for taxi and parking would be the go



oh wait, got that

[simmo77]

Hi Guys - ill also add 2 cents.

When getting a car allowance, you can get it taxed by your employer or complete a form called PAYG withholding variation short application 2013 Allowance or HELP / Financial supplement from the ATO. If this is approved, you then receive your allowance tax free. If you get it tax free, make sure you spend all your allowance or you can find yourself owing the tax man money.

Eg: Car allowance - $15000 pa

Repayments - $1000 per month = $12000 pa

Fuel - $100 per week = $5200 pa

Insurance and Rego - $150 per month = $1800 pa

Service and Repairs - $2000 pa

Total cost = $21,000

If you then work out your % for Business use say 90%. Total spend of $21000 @ 90% = $18,900. Therefore, $15000 car allowance is justified as you have spent $18,900 for business purposes. In this case, you get the car allowance tax free and will get some additional money back.

[ronburgundy]

+1

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Edited 02/02/13 02:32 AM by ronburgundy

[NickBA-XR6T]

ron, I know what you are saying but if that allowance pushes you into the next taxation bracket by a small amount it might come as a rude shock.

[spook]

I've been on a car allowance for over 23 years and love it. Just keep receipts so you can justify the allowance at tax time.

As others have said, you will get taxed on any amount not spent if you have opted to not have your allowance taxed.

Some guys at work opt to have it taxed and get it back at tax time if all of the allowance is spent (pay now get back later sort of thing)

Just keep in mind that if you claim depreciation on a car for a few years then sell it for more than the depreciated amount, you will get slugged by the tax man on the difference (think I have that right)

Edited 02/02/13 10:27 AM by spook

[NickBA-XR6T]

Spook = correct

There are common guidelines for depreciating vehicles. If you stick to those you should be right.

The golden rule is, don't be too aggressive with depreciation schedules. Some people over-expense depreciation on their assets to reduce gross income and therefore pay less tax, which works in the short term while the asset is held. When the time comes to sell the asset, say at the end of 3 or 5 years, it can hurt.

If you plan on holding the asset long term, say 10 or more years, and fully depreciate the asset over the first 5 years to minimize tax, say in a start up business, then you are a little safer as the sale value of a 10 year old car may only be a few thousand dollars. Personally I wouldn't recommend that avenue, nor would most good accountants.

[wa g6et]

Be wary of novating and FBT if you pay child support, can be very costly to you and the ex gets a huge bonus.

[ronburgundy]

On that - child support is paid based on your Adjusted Taxable Income which includes Reportable Fringe Benefits.

If you make an Employee Contribution (basically pay the FBT) you can reduce the Reportable amount to nil.

Same applies when calculating your income for Centre link purposes plus Medicare rebates and private health surcharge etc

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[NickBA-XR6T]

Easy = Don't have kids!

But seriously either way if your ex is collecting child support from you, you are farked already, and have been completely raped in the divorce settlement or family court as well.

The whole Australian child support system is a disgrace. By boss pays $23,000 a year in child support and his ex married another wealthy guy after him. She took his $2m house, which he owned outright BEFORE he even met her, and a whole stack of his other investments, all previously owned. Being a bloke in this country is like having a bullseye on your back. I am not saying women shouldn't be supported by the father of the child but we need to bring in "at fault" divorce and protect a persons assets that were obtained prior to the relationship/marriage.