Car Expenses Being Tax Deductable?

[Brodes]

I've thought of this for a while but never looked further into it.

With having a classic car (or any car for that matter), it can be hired for a wedding, special occasion, etc. Now the ATO clearly wants you to declare any money made from this. What if someone were to register as a small buisness for this purpose (even having only one car), do all of the vehicle expenses become a tax deduction? Thus you could continue to restore knowing you'll get some $$ back at tax time?

Thoughts?

[Crazy Dazz]

Originally Posted by Brodes

I've thought of this for a while but never looked further into it.

With having a classic car (or any car for that matter), it can be hired for a wedding, special occasion, etc. Now the ATO clearly wants you to declare any money made from this. What if someone were to register as a small buisness for this purpose (even having only one car), do all of the vehicle expenses become a tax deduction? Thus you could continue to restore knowing you'll get some $$ back at tax time?

Thoughts?

NO.
People have been trying to pull that one since taxation was invented.

The first problem, and this goes back decades, is that you need to actually be carrying on a business. Huge amount of caselaw on this, but put simply the ATO would deem it a a hobby, not a business.

Then, to make it crystal clear, a while back they introduced specific legislation, and you need to pass certain tests otherwise it is deemed "non-commercial."

Its particularly difficult with cars, because you are limited in what you can claim unless you keep a logbook.

Lastly, you mention restoring. Money spent on restoration would be capital and only claimable via depreciation.

(CPA & Tax Accountant.)

[bangm001]

Yeah interesting topic, cash works best here...

[Vesper Martini]

Compare it to a rental property.
You can claim any repairs, but the work needs to be done by an external contractor.
ie you cant, make clams for fixing a toilet yourself, pretty sure you cant even claim the parts.
I would assume car restoration would be the same as house renovation's. so what Daz has said above.
but it would be difficult to prove any capital improvement on a car.

[turbodewd]

Any expenses incurred during the course of gathering income are generally tax deductible. So if youre running a wedding car business then obviously maintaining said cars is an allowable expense, eg tires, cleaning, rego, insurance, re-furbishing worn seats.

See an accountant

[MickyB]

As Dazz said, you need to meet certain requirements before you can claim the business loss against other assessable income. So basically, if it is a non-commercial business (from an ATO perspective) and it makes a loss, the loss is quarantined against future tax profits from that specific business. Have a read of the provisions here: https://www.ato.gov.au/business/non-...s/eligibility/

(Another CPA and tax accountant)

[rods falcon]

I wonder how many CPA's, CA's, tax accountants there are on here? (another CPA and tax accountant)

[wodahs]

Originally Posted by turbodewd

Any expenses incurred during the course of gathering income are generally tax deductible. So if youre running a wedding car business then obviously maintaining said cars is an allowable expense, eg tires, cleaning, rego, insurance, re-furbishing worn seats.

See an accountant

if your doing it 5% of the time and using it for other 95% of the time you cant claim 100% deductions , you may be able to claim 5% deductions of general running costs but not 100%

I can claim certain running costs involved with the running of my vehicle for work purposes and this only reflects the percentage that I actually use it for that purpose and I need to keep documentation on this

[Vesper Martini]

Originally Posted by turbodewd

Any expenses incurred during the course of gathering income are generally tax deductible. So if youre running a wedding car business then obviously maintaining said cars is an allowable expense, eg tires, cleaning, rego, insurance, re-furbishing worn seats.

See an accountant

You would struggle with furbishing worn seats. I think it would be covered in the vehicles depreciation.

[carwant.com.au]

You could do it.... as long as your 'business' turns over (not profit, just revenue) $20,000, then you can classify it as a business. As it's 'now' a business, you can then claim your repairs as a loss; then if you have the business under your personal name, you can claim the loss against your 'normal' day job taxable income.

Capital improvements have to be claimed over a few years or more, but (let's say) your interior carpet was ripped and needed 'repairing' (not replacing....), then that's an instant write off.

I'm not an accountant, but have studied this and done three businesses following the same concept. Go and see an accountant for some advice.

By the way - whilst setting up a business in your name allows you to claim the business loss against your taxable income (for your normal full time job), the downfall with setting up a business in your name means if someone wants to sue you for any reason, your personal assets can be taken away from you....

See an accountant that specialises in this area for more detail, or if you want free advice, call the tax office and ask them. The must provide free advice to all....