Anyone know how to most effectively package a car allowance?

If you don't use all of your entitlements, how does the tax man cometh?

Hi IQSRLOW

Sorry I know nothing about that.
Often when I have a tax query I ring the Aussie tax Office and ask them.
They are very good, very helpful and are happy that a customer ask them first.
You are not wanting to cheat them, just to be informed. That is to everyones best interests,

They have never asked my name, though I give it anyway.
They make the rules, so know them pretty well.  :-)

And it's free.

Your accountant at work may be able to help also. I don't think there's much benefit in this sort of thing any more. Also, make sure you seriously consider the benefits of taking the money instead. Most people who do this end up with an expensive car that they wouldn't normally fork out for themselves.

Thats what I am trying to work out.

The car allowance is paid directly to me, tax free I presume. I buy whatever I like and account for all expenses.

My point being do I buy a fiat bambino and pocket the balance or get that BMW I have always wanted. I believe there are a few tax implications.

IQSRLOW wrote on May 24^th, 2007 at 9:58am:

Thats what I am trying to work out. The car allowance is paid directly to me, tax free I presume. I buy whatever I like and account for all expenses. My point being do I buy a fiat bambino and pocket the balance or get that BMW I have always wanted. I believe there are a few tax implications.

Would it be legal to' pocket the balance I,m wondering?'

Yes, entirely legal to pocket the balance.

A car allowance is given to cover the cost of running a car. If the actual cost is less, good for you. If acttual cost is more, bad luck .
Generally those allowances may seem generous. However they are very well calculated, there will be little if any left over after ALL the costs.
My preference would be to take the company car, sell my own.  As long as I can use theirs legitimately for personal use.

Sprintcyclist wrote on May 24^th, 2007 at 1:15pm:

Yes, entirely legal to pocket the balance. A car allowance is given to cover the cost of running a car. If the actual cost is less, good for you. If acttual cost is more, bad luck . Generally those allowances may seem generous. However they are very well calculated, there will be little if any left over after ALL the costs. My preference would be to take the company car, sell my own.  As long as I can use theirs legitimately for personal use.

Thanks for that Sprint.
;)

The car allowance is in lieu of a company car.

It may be that the tax man will take nearly half of anything left over...might be time to visit an accountant  :-/

good idea to se an expert.  
rang the australian Tax office yet ? They are pretty knowlagable about such matters.
Apparently they even have inside information !   :)

Course, it's free and convenient. Right on the phone, or net I guess.

I think it is counted as income either way and you get taxed on it, so you might as well just take the money.

Laptop computers are a different issue. You get a good tax rebate on them. If you are on the top bracket the government gives you back more money than what you paid for the laptop.

Sprintcyclist wrote on May 24^th, 2007 at 3:38pm:

good idea to se an expert.   rang the australian Tax office yet ? They are pretty knowlagable about such matters. Apparently they even have inside information !   :) Course, it's free and convenient. Right on the phone, or net I guess.

They were about as helpful as a one armed man in a rowing competition.

Rather than asking them what you should do, you need to ask them what the law is, then figure out what you should do based on that. They aren't going to give 'personal advice' because that requires them to know your situation in some detail. Try asking them under what conditions you can avoid having to register goods as income.

I wasn't asking them what I should do. I was asking them how it is taxed, but the young guy on the phone had no idea unless it was salary sacrificed, which technically it isn't.