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CaptainSunshine(Initiate)Initiate
4 Apr 2024

Hi

I am seriously thinking about an Associate Car Lease with my wife being the Associate. She has no income and lease payments and running costs approx $18k pa. I know that she is under the GST threshold of $75k BUT can she register for GST? The reason being is so she can claim GST back on purchase of EV car, I realise when the car sold there will be GST to pay (but a net refund given cars lose value over time). As I see it apart from the vehicle buy/sell she can charge my employer the Lease cost(incl running costs) + GST and have the offset of GST on the Motor Vehicle costs. So the question is CAN she register for GST being an associate (some websites say no)?

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239 views
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YEP(Devotee)Devotee
4 Apr 2024

No your wife can not register for GST as she is not carrying on a enterprise (in other words a business).


Think of it this way, if your wife could register for GST when she is not carrying on an enterprise then everyone else would be registering for GST and claiming the GST back for everything that they purchase that has GST, and that would mean that no one would be paying GST.

CaptainSunshine(Initiate)Initiate
4 Apr 2024

Thanks but in order for her to be an Associate she must have an ABN, thus is carrying on a business. There is also the expectation that the activity is profitable as far as I have gleaned. The GST aspect is one with conflicting answers, some articles say she may, others must not be registered. The ATO guidelines do not really enlighten me in terms of Associate Leases.

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YEP(Devotee)Devotee
5 Apr 2024

Well after reviewing this, I certainly got that wrong about the ABN.


As for GST, I see what you mean and the only way to get an correct answer is to apply to the ATO for a private ruling.


That way you will have something in writing from the ATO that is actually binding on them, and its totally free of charge.


https://www.ato.gov.au/about-ato/ato-advice-and-guidance/ato-advice-products-rulings/private-rulings/applying-for-a-private-ruling



CaptainSunshine(Initiate)Initiate
28 June 2024

@CaptainSunshine

By way of an update I have just received the private ruling from the ATO. Yes my wife can be registered for GST even though she will be under the threshold of $75,000. So this means the running costs I pay will be without GST though she will charge my employer GST, also can get GST back on purchase (though pay GST on eventual sale price), cashflow wise a gain of $3-$4k which we can use to pay down borrowings on car. A win win!

Liked by synergy
synergy(Newbie)Newbie
1 Aug 2024

@CaptainSunshine


Thanks you very much for sharing the private ruling re GST registration for associate lease. Do you use an consultant to help you with lease agreement and calculate lease payment? I guess the judgmental one is to determine the interest rate for the lease then calculate the monthly lease payment. Do you have any good consultant to recommend?

CaptainSunshine(Initiate)Initiate
3 Nov 2024

@synergy


Hi Synergy

Sorry for the late reply, I did this all myself BUT using third party (Arm's length) information. I asked the Novated Lease providers their interest rate.This was my calc (BTW I got an online Associate Lease from RP Emery and modified), sorry couldn't do screenshot. I'm a Commercial Accountant but used my nous. You can get Salary Packaging people to set up for you at a fee, but I did myself. This is a BYD, so a full EV, please note this does not apply for a Hybrid.




Amount To Finance $                     47,836.40 $                                              -   $       47,836.40 Residual $                     14,802.02 30.94%

Period 60 Mths 


Interest Rate10.57%10.57%Per Amort Sched


    Per Calculator

PeriodWeekLoan Repayment   $             198.17




Running Costs:



Estimated kms per Year                              22,000


Electric Car Home Charging ATO $                             0.042


Value Home Charging $                          924.00 Year $               17.77

Servicing $                 5.79

Tyres $               15.38

Incidentals/Washes $10 pw $               10.00

Registration Renewal $               16.52

Comprehensive Insurance $               28.85

Admin Fee $10 pw $               10.00

Subtotal Running Costs   $             104.31

Total Costs   $             302.48

Commercial Risk/Profit 15.05% $               15.70

Total Employee   $             318.18 

  GST $               31.82

Charge Employer   $             350.00


This is going well thus far (started July) and even though we don't have finance yet, once you factor in depreciation, my wife won't be taxed. Also I did GST cash basis, so you don't pay over any GST until you have it in your bank account.

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Can an Associate in an Associate Lease Register for GST? | ATO Community