TRAVELLING & WORKING UNDER A COMPANY STRUCTURE

Question

Hi Julia,

I spoke to Lyn Gower today and she gave me your number. Tried calling you and got your voice mail.

I understand the concept I’ve read in your publications regarding itinerant workers travelling around OZ. But all that I’ve read is skewed towards individuals.

I’ve been running my own [accounting software support] business under a company structure for 30+ years and am about to embark on an adventure travelling Australia. I will continue to run that business while my partner will no doubt pick up the occasional employment.

Lyn told me that you had already done the same … so here’s my question. I’ve always had a company car [97.5% business use] and wonder if I can buy our 5th wheeler in the company name, claim back the GST and claim, through the company, a % of the travel costs.

We’re just about to take delivery of our 5th wheeler, with it being registered on Wed or Thu this week. So I have the opportunity to first register it in the company name.

I look forward to hearing from you soon.

Answer


Sorry Chris Mondays are always full on for me especially this time of year. Thanks for using askbantacs it is bit easier to find time to write than to ring at the right time of day.
With all your experience I am assuming a fair bit of knowledge on your part. Please let me know if I need to clarify anything.
I own my motor home through my holding trust. I did this because I feel that assets of any significance should be held outside the trading entity. These days unfortunately to really get that asset protection you also have to register your interest on the Personal Property Security Register and that is another cost. So you need to work out if you think this is worthwhile.
The trading entity then leases the 5th wheeler from the holding trust. The holding trust is registered for GST and charges the company GST in the lease which it claims back so nil net effect. The holding trust gets the GST back on the purchase 100% as used 100% to lease to your company. The lease payments received by the holding trust are offset by depreciation. You may like to charge even more so the trust can make a profit and distribute it as suites you. This is especially useful if your company is caught with personal services income. In my case once the adjustment period expired I de registered the holding trust for GST purposes. Saved me the hassle of another BAS and means I won’t have to pay GST on the proceeds when I sell the motor home. If I wanted to, now I could transfer it out of the trust to myself with very little consequences. So you are not locked in forever. But you would be locked in if you bought it in the company because you may not be in a position to de register the company for GST as it may still be turning over more than $75,000 a year.
I have a few more advantages because my mobile home is a vehicle so I can take advantage of the FBT considerations that apply to trucks. In your case it would be a fringe benefit when the company allows you to use it for private purposes. Nevertheless the company would get 100% deduction for the lease payments and all expenses and you would then have to cancel out the fringe benefit (non deductible percentage) by making an employee contribution.
Now this is the trick when it comes to claiming your trip around Australia as a tax deduction. You need to organise your travel to suite your work. I have not found this difficult at all especially now we have 11 offices. I am not sure how you are going to justify travel if you are just providing internet bookkeeping services but that is all in the booklet. Your only advantage in being in your own business is it may be easier to come up with a work related reason for your travel. There can also be related travel such as to get things in the van repaired or to visit your accountant.
Are you going to be anywhere near Mackay on 2nd July? I will be doing a travelling workers seminar. If not maybe we had better have a bit of a chat on the phone as to just how you are going to justify your travel.

. .
Have a question about tax you need answered?

. Ask your own tax question here for only $79.95