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sammychau202(Initiate)Initiate
7 Aug 2022

Hi,


I'm having questions regarding deductions in terms of motor vehicle expenses and how it should be treated.

I started my partnership business with a business partner last year. We had two motor vehicles (Under our ownership) that were 100% used business purposes and we had already claimed full amount of depreciation at the time. Whenever we topped up the fuel, we would always use the business bank card. Now that we have changed to company structure and those two motor vehicles are still under our names (One under my name and one under his name). I'm just confused of how we should treat the running expenses associated with those motor vehicles. My questions are:

  1. Are we still be able to use the company card to pay for the fuel or registration or insurance and maintenance given that the motor vehicles are under our ownership? (Still, 100% used for business purposes)
  2. If either one of us pay for the fuel due to not having card with us some time, can we claim for reimbursement to get whatever we have paid for the fuel back?
  3. Given the answer of question 2 is yes we can, if the company pays us the amount back, I understand that the company can claim it as a deduction but will the amount be included as a part of our personal assessable income?
  4. Do allowance and reimbursement have different tax implication?

Thank you


3,097 views
3 replies
3,097 views
3 replies

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Most helpful reply

RachATO(Community Support)Community Support
8 Aug 2022

Hi @sammychau202,


Great amount of background information there, let me help you out :)


1. Yes. The car must be owned, leased or under a hire-purchase arrangement, but the criteria doesn't specify who must hold the ownership or registration. So yes, the business related portion of expenses can still be paid via a company credit card even if the company isn't listed as the owner. As such, these expenses would be claimed on the company tax return, not your individual tax return. Just remember for eligible business deductions, 3 golden rules apply. 


2. The company can reimburse you and claim the actual costs as above.


3. If it's a reimbursement for the exact amount, then the reimbursement wouldn't count towards your assessable income.


4.Yes they do. Depending on the allowance it could be included as income. Reimbursements might have FBT implications it also depends what it is. Check our page about allowances and reimbursements

All replies

Most helpful reply

RachATO(Community Support)Community Support
8 Aug 2022

Hi @sammychau202,


Great amount of background information there, let me help you out :)


1. Yes. The car must be owned, leased or under a hire-purchase arrangement, but the criteria doesn't specify who must hold the ownership or registration. So yes, the business related portion of expenses can still be paid via a company credit card even if the company isn't listed as the owner. As such, these expenses would be claimed on the company tax return, not your individual tax return. Just remember for eligible business deductions, 3 golden rules apply. 


2. The company can reimburse you and claim the actual costs as above.


3. If it's a reimbursement for the exact amount, then the reimbursement wouldn't count towards your assessable income.


4.Yes they do. Depending on the allowance it could be included as income. Reimbursements might have FBT implications it also depends what it is. Check our page about allowances and reimbursements

sammychau202(Initiate)Initiate
16 Aug 2022

Thank you@RachATO . One more thing, what is considered as the record to prove that the vehicles are 100% used for business purposes? I've seen the golden rules and it does mention about proof. Thank you

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