“We want to help small businesses – if you’ve purchased a car for your business, you may receive a letter from us soon to help you work out whether you’re providing car fringe benefits”
If you buy a car with an ABN then there is a chance that you may be called by the taxman to discuss who is using the car and whether what is called a “Fringe benefit” has occurred.
A car fringe benefit occurs when your business owns or leases a car and makes it available for your employees’ private travel. Keep in mind that directors might also be employees.
Some examples of providing a car fringe benefit include:
Employees using the car for private travel, such as travel between work and home.
Garaging the car at or near your employees’ home, which makes it available for private use – even if it is not used privately.
In the case of a company – if you are a director, this includes you.
Things that can often trip you up are:
We think it’s best to avoid the fringe benefit, for small businesses it’s a headache and another level of tax consumes too much time. The way around? Claim from the expense of vehicles what are true business costs.
Keeping a log, via a log book or an app, and splitting the costs as they occur means that you get down to the true cost of the vehicle for the business. Some vehicles you can claim everything, a brickies Ute clearly says “work horse” and doesn’t appear outside the family BBQ or church on Sunday.
If you were thinking you need to understand business claims and want to further discuss the benefits and impact, call Your Business Angels on 1300-982-559,
Thank You for reading this
Gavin Waring
