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Yachty13(Newbie)Newbie
23 Feb 2025

I have recently established a proprietary company and wish to use my present car, that is financed with a car loan, as a work car. Can the PTY LTD lease the car off me as an individual? Can I charge the PTY LTD a fee in addition to the interest I am paying to my present finance provider (I acknowledge this fee will be taxable under personal income tax)? If yes, how do I establish that leasing arrangement from a record keeping perspective? Is a letter from me as private individual to the PTY LTD explaining the arrangement sufficient?

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690 views
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Most helpful reply

MPrivate(Superuser)Superuser
23 Feb 2025

Hi,

the company and you are separate entities, so arrangement is possible if it is made on commercial terms. In other words, the terms on which the company leases the car have to be similar to those from an independent commercial car lease business. Their rates will determine how much you could charge, rather than the lease you are currently paying to your finance provider. Evidence would be a formal contact between you and the company, similar to what a commercial car rental would do.

If the arrangement is made on a non-commercial terms, there is a risk of Fringe Benefits Tax for the company and/or some of the lease payments being not tax deductible to the company. To keep it simple, you may explore other options like a car allowance from the company to you. Best to consult a registered tax agent who can advise on your specific circumstances. Best wishes

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Most helpful reply

MPrivate(Superuser)Superuser
23 Feb 2025

Hi,

the company and you are separate entities, so arrangement is possible if it is made on commercial terms. In other words, the terms on which the company leases the car have to be similar to those from an independent commercial car lease business. Their rates will determine how much you could charge, rather than the lease you are currently paying to your finance provider. Evidence would be a formal contact between you and the company, similar to what a commercial car rental would do.

If the arrangement is made on a non-commercial terms, there is a risk of Fringe Benefits Tax for the company and/or some of the lease payments being not tax deductible to the company. To keep it simple, you may explore other options like a car allowance from the company to you. Best to consult a registered tax agent who can advise on your specific circumstances. Best wishes

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Can a PTY LTD lease a vehicle from an individual? If so, how do I provide evidence of the lease? | ATO Community