As the 2021-22 financial year comes to a close, you might be looking at upgrading your current business vehicle. With small business growth front and centre in Queensland, as demonstrated by the number of recent business alliances being established, now could be the right time for you. Consider these four useful tips before buying your next company car.
Look out for great sales
Perhaps the most important and obvious area to keep an eye on come the end of the financial year is its sales. Dealerships offer discounted vehicles across the month of June as the new financial year approaches, which can potentially save you thousands of dollars compared to what you might spend in July or August.
With discounts applied, you may be able to select from vehicles which may not have otherwise been affordable for your business. The right vehicle can help your business continue to grow, particularly if you rely on it in the day-to-day running of your business. Growth has been seen by other small businesses in the region, such as the recent expansion of Toowoomba-based Qld Hot Property, so it’s important to take hold of key opportunities when they’re available.
Get the right type of finance
Of course, you’ll need to be able to source the funds required to purchase your next vehicle. While you can offset this cost by selling your existing vehicle or utilising any savings your company may have stashed away, most businesses will need to take out a loan to do so.
Rather than opting for a car or personal loan, though, you should consider upgrading your car with a chattel mortgage. This is a product designed specifically for businesses which enables you to space out your repayments over one to seven years and realise important tax deductions.
Consider the tax benefits available
There are many key tax factors to keep in mind when upgrading your vehicle. If your purchase falls within the instant asset write off threshold, you can claim the entire business portion of its usage as a deduction in the year it was first used. There are other common expenses which can be claimed by business operators, such as insurance, registration, fuel and servicing.
Additionally, when taking on a chattel mortgage, you can claim the interest of your loan repayments, as well as the GST on the purchase price of the car and its depreciation (decline in value).
Think about your business’ needs
Before you commit to the upgrade, though, there are many other areas to consider about your business. Does it need a new vehicle to continue its growth? If your business has reverted to primarily home – or office-based operations in the past few years and only requires limited vehicle usage, might your funds be better invested elsewhere?
This can also inform your choice of vehicle. For instance, if you’re a sole trader who only needs a small car to travel around the city, you’re unlikely to require a more expensive four-wheel drive or ute. All business owners and operators should have a clear understanding of what’s required to keep their business running smoothly.