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Buying a car under a company that earns PSI

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I have a company and I contract through a recruitment agency. The only income the company is currently making is through this contract - so the PSI rules will apply. I am also registered for GST under the company.

 

Since the beginning of the contract, I have worked from home and occasionally go to the office of the client I am contracting with to attend meetings (not the recruitment agency).  I have a couple of questions about the impacts of buying a car to travel to these meetings. The car will likely be used 60% business and 40% personal.

 

1) If the company buys the car, I can claim the GST and instant tax write off but I assume the company will be required to pay FBT on any personal use on the car? Is that correct?

 

2) Can I claim travel to and from the client's office and parking costs as a company expense? I am a bit confused about claiming company expenses for a car when earning PSI? 

 

Any help you can provide would be great

 

thank you 

 

 

 

 

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Most helpful response

ATO Community Support

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Hi @Sydney14,

 

True, you'll need to pay FBT on the personal use portion of the car.

 

You can claim car expenses because you obtained them while producing an income.

 

All the very best.

3 REPLIES 3

Most helpful response

ATO Community Support

Replies 0

Hi @Sydney14,

 

True, you'll need to pay FBT on the personal use portion of the car.

 

You can claim car expenses because you obtained them while producing an income.

 

All the very best.

I'm new

Replies 1

Does this mean you can write off the full purchase price as a business expense uder the current 150K instant asset write-off ruling?

ATO Community Support

Replies 0

Hi @Sydney14

 

As you have self-determined that your current income is all PSI I won't question that. It might be worthwhile seeking a professional opinion on that if you haven't already.  What it means is that you are treated like an employee of the recruitment agency for tax deduction purposes.

 

In that context, in answer to your questions:

 

1) Through your company you can only claim the business use percentage of the expenses associated with the purchase of the car, i.e. 60% under the temporary full expensing rule.  You needed to have purchased it prior to 31/12/2020 to be able to write off 100% of the cost.

 

2) You can claim travel and parking expenses from your home office to the clients' workplaces, including the Recruitment agency offices, as you would be entitled to claim these expenses as an individual employee to generate the income.

 

You can read more about the instant asset write-off for eligible businesses on our web site.

 

 

Hi @mattgi, no it doesn't. Refer to the information on temporary full expensing here and to point 1) reply.

 

RichATO