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More Bad FBT Rules
The new Tax Bill (deferred until after the Election - see following article) is really harmful and unfair to owner-operated company businesses. The problem relates to FBT on cars.
The Bill will over-ride the use of "9-5" or "business use" motor-vehicle leases. These leases have enabled a self-employed business person to lease their car to their company for business use and claim a tax deduction for the business use portion of the costs.
Effectively it puts them on the same basis as a self-employed business person who operates on their own account or through a partnership. This is not a tax dodge…it simply enables a legitimate deduction for business motor vehicle expenses.
The cost of this change to many of you will be considerable. We estimate that for a typical client there will be a one-off cash tax and GST cost (based on a $60,000 car) of around $12,000! And an annual extra tax cost of around $5500!
Perhaps this should be called Mr Cullen's "Tall Poppy Tax" i.e. he wants everyone to drive a cheap car, and will penalise anyone who wants to succeed?
There is a simple way to fix this problem - that is to allow cars to be treated in the same way as other "work related vehicles” like utes and vans.
You could then claim legitimate costs of running your car on business, but not get a deduction for your private running.
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