We have a client who is an options trader. He would like to buy a motor vehicle under the company name. It is quite clear that the company car would not be mainly used for business purposes as it would be hard to argue that an options trader needs this mainly for business. Can he still use the 50% tax rebate?
Where your client buys the car through their company they should be eligible for the investment allowance. The car would be fully deductible to the company. The issue of private use is a fringe benefits tax matter. Inside the company the purpose test is satisfied because it is a vehicle supplied to an employee. If the car was owned outside of a company e.g as a partnership or a sole trader then it would have to satisfy the test of being primarily (greater than 50%) used for business purposes. A vehicle that is being claimed under a cents per km. method will not be eligible for investment allowance.
Got a question for one of our Experts? Choose one that suits your area of inquiry and send it in to asktheexperts@smartcompany.com.au
To read more Tax Advice, click here.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
