Here are the benefits of buying with an ABN

Using an Australian Business Number (ABN) when buying a car is not uncommon, but there are some important things to consider if you’re looking to take advantage of end of financial year (EOFY) deals.

You will need to consider tax as well as post-purchase items such as registration, insurance, maintenance and repairs – and they are important regardless of whether you are buying as a company or sole trader. Or have a business at home. business.

With that in mind, here’s a brief overview of how you can benefit from buying a car with an ABN, especially with the EOFY offers currently on the table.

What is ABN?

According to Australian GovernmentABN is an 11-digit number that identifies your business to the government and the community.

In short, it allows you to identify your business to others when ordering and invoicing, claiming Goods and Services Tax (GST) credits used to reduce liability GST legal and get an Australian domain name for your website.

It’s important to remember that not everyone needs an ABN – you must run a business or other enterprise to be entitled to an ABN.

What is the difference of buying with an ABN?

Manufacturers often offer discounted ABN prices on commercial vehicles (utes or vans) throughout the year.

There are also potential deals for the purchase of many vehicles. Toyota is an example of a brand that has a detailed fleet plan for business customers, including purchase packages, service by dedicated technicians, ongoing business support, and accessories car.

At EOFY, manufacturers will often offer additional discounts to ABN holders.

For example, SsangYong is offering up to $3000 off for ABN owners only on the 2024 model year. Rexton SUVs and Musso ute. There are a few things to consider before you sign on the dotted line.

“If I were an ABN buyer, I would be looking for something in stock,” Waverley Mazda general manager Ravi Emaduwage told CarExpert.

“I want to make sure I buy something this financial year and I know what deals are available depending on what’s in stock and what I’m looking for.”

“ABN pricing gives you a big discount depending on the model you’re after.”

How can businesses cut costs when purchasing with ABN?

The advantage of buying with an ABN is that you’ll be able to take advantage of cheaper upfront prices on certain vehicles.

ABN discounts apply to commercial vehicles, including vans and pick-ups. For example, Mazda is currently offering it Drive-away discount on the BT-50 ute for those with an ABN.

Mr Emaduwage said: “With the BT-50 you get an extra bonus if you are an ABN buyer, so it could be part of a fleet campaign or if you buy one car out of many ”.

“Depending on the quantity you buy or for a certain fleet, you may receive a certain percentage off depending on the type of vehicle you plan to buy.”

The Australian Taxation Office (ATO) said business owners can claim an input tax credit (GST credit) on top of the GST in the purchase price – as well as claim a deduction for car purchase costs, which reduces taxable income. tax.

According to the ATO, purchasing with an ABN implies that the vehicle will be used for business purposes, at least in part. That means personal use cannot be claimed as a tax deduction.

Businesses can claim all expenses related to business vehicles as a business deduction. When cars are used for business purposes, companies can claim tax deductions for expenses including finance loans, tolls and parking fees.

To claim the deduction, the business or employee must:

• Own or rent a car
• Reimbursement has not been made for the vehicle or its costs
• Have the necessary records to calculate deductions (diary or cents per km File)
• Only claim expenses for work-related trips
  • Travel may be required between workplaces or to perform job duties
  • Can’t claim trips between home and work – except in limited circumstances, like driving from home to a job that’s not your usual place of work

If your vehicle travel is partly personal, you can only claim a deduction for the part of your work-related expenses.

You also need to remember that allowing an employee to use a car to get to work for personal purposes is considered a fringe benefit, meaning the employee is subject to fringe benefit tax (FBT). According to ATOFBT is a tax paid by employers on certain benefits provided to employees.

FBT is charged at 47% of the total taxable value of fringe benefits, but employers can claim income tax deductions and GST credits for the cost of providing fringe benefits.

Both companies and sole traders can qualify for immediate deductions under the instant asset write-off scheme.

That means if the cost of the car is under $20,000, you can claim a portion of the car’s value from your taxable income for that financial year.

What to consider when it’s time to buy?

When buying a car, you can finance it or buy it outright. The right approach will vary from business to business.

Financing with an ABN also has benefits as the cost of the loan can be claimed as a tax deduction for your business.

It is likely that lenders will request financial accounts and tax returns from sole traders to determine their ability to repay, so it is important to keep all documents up to date and readily available. ready to use.

You can also choose a fixed or variable rate loan, but the benefits and drawbacks depend on the specific circumstances of any given business. Just like when buying a new car yourself, research is important.

Disclaimer: The information on this website is for general purposes only and is not a substitute for professional financial advice. Car expert advises you to seek independent legal, financial, tax or other advice specific to your personal circumstances.

AGREE: SsangYong Korando 2023 Driving Agreement
AGREE: SsangYong Musso 2023 driving incentives
AGREE: SsangYong Rexton 2023 deal
AGREE: Volkswagen Amarok 2023 driving incentives
AGREE: Driving incentives for Mazda BT-50 2024
AGREE: Mitsubishi Triton 2023 free towing package
AGREE: Nissan Navara 2024 driving incentives
THAN: All new car deals available now
THAN: What is new leasing and how does it work?