When it comes to buying a car for business use, one question can leave you scratching your head: should I register it in my company name or my personal name? This decision isn’t just about paperwork—it can impact your tax deductions, GST claims, insurance premiums, and even your overall financial strategy.
Both options have their perks and pitfalls, from maximising tax benefits to avoiding the administrative headache of fringe benefits tax (FBT). In this guide, we break down the pros and cons of each choice, so you can make an informed decision that’s right for you, your business, and your bottom line.
Company Name Registration
When you register a car in your company’s name, the business officially owns it. This can open up some great tax benefits but also comes with a few extra hoops to jump through.
GST Claims
A big win for registering in the company’s name is claiming GST on the car’s purchase price and running costs. But there’s a limit—literally.
2024-25 Financial Year Luxury Car Limits:
$91,387 for fuel-efficient vehicles
$80,567 for all other vehicles
So, if you buy a fancy car that costs more than these amounts, you can only claim GST on the portion up to the limit. That means your shiny $100,000 car only gets GST credits for $91,387 (if it’s fuel-efficient) or $80,567 otherwise.
Deductible Expenses
The tax perks of a company-owned car don’t stop at GST. You can claim 100% of the running costs, which include:
Fuel (we know how pricey that can get!)
Repairs and maintenance
Registration fees
Insurance
Depreciation or lease payments
Fringe Benefits Tax (FBT)
Here’s the not-so-fun part: FBT. If your company car is available for private use, FBT applies. Since the statutory method for calculating FBT is no longer an option, the Operating Cost Method is now the go-to.
Operating Cost Method: You’ll need to keep a 12-week logbook to track how much of the car’s use is for business versus private purposes. FBT is then calculated on the private-use portion, and at 47%, it can add up quickly.
FBT-Exempt Vehicles
Before you panic about FBT, know that some vehicles are exempt:
- Utes and panel vans (designed to carry loads under 1 tonne)
- Vehicles that carry nine or more passengers
- Motorcycles (note! – not be subject to FBT under the car fringe benefits category. However, it could potentially be subject to FBT under other categories, depending on the circumstances of its use).
These vehicles are considered workhorses and aren’t taxed for private use (as long as they’re mostly used for business).
Personal Name Registration
Registering the car in your personal name is a simpler option. It avoids FBT headaches and keeps things flexible, but the tax benefits aren’t as generous.
GST Claims
Unfortunately, you can’t claim GST on a car bought in your personal name unless you’re GST-registered as a sole trader.
Deductible Expenses
When a car is personally owned, you can still claim expenses based on how much you use it for business. There are two options:
Cents-Per-Kilometre Method
- Claim 88 cents per kilometre for business travel.
- Maximum of 5,000 km per year, so the most you can claim is $4,400 annually.
Logbook Method
- Keep a logbook for 12 weeks to calculate your business-use percentage.
- Claim that percentage of actual expenses like fuel, maintenance, and insurance.
No FBT Implications
Here’s the good news: personal ownership means no FBT. You can use the car for both business and personal trips without the tax office breathing down your neck.
Conclusion
The choice between registering your car in the company name or your personal name really comes down to how you plan to use the car, your tax structure, and how much admin you’re willing to deal with.
While company name registration is great for maximising tax claims and GST benefits, it comes with the potential FBT sting and higher insurance costs. On the other hand personal name registration is: simpler, avoids FBT, and gives you more freedom, BUT the tax benefits can be smaller.
Still not sure? Let’s chat!
