Sell my car into my Trust?

My business partner has just bought a new car through his Trust, our accountant said he can write off the first $20k this year as part of the small business instant write off scheme that finishes this June.

I don't really need a new car. Mines worth about $20k, can I sell my car into my Trust and then claim the write off and depreciation?

Doesn't sound like it would pass the pub test.

Cheers

 

Is hte trust a small business?

 

Yes. The Trust is the shareholder of our business. We have a Trust each and the two Trusts are the two equal shareholders of our business.

 

Holding shares itself would not amount to conducting a business.

 

This is the breakdown, (and the structure as advised by our solicitor & accountant at the time):-

Two of us set the company up, (myself and a business partner)
Each of us has a Trust
The two Trusts are the 50/50 shareholders of the company, all work is carried out through the company
We both work full time in the company and the company also employs two further staff
The company pays the staff and all running costs & office lease etc
The company pays the two Trusts for the work my partner and I do
Each Trusts disperses to each of us depending on the individuals Trust resolutions

Cheers.

 

Company pays the trusts as dividends? Or something else?

 

Pretty sure the deduction is only for assets that cost less than $20,000; not the first $20,000 of an asset ...

 

For a cost to be deductible it has to relate to the production of income. If the trust is just receiving dividends then why does it need a car?

If the trustee is contracting with the company for the supply of services then the income may be business income.

 

Not sure yet until I clarify with the accountant, I believe it's a dividend.

Accountant said the first $20k can be deducted, but a moot point if the car is worth that or less anyway I guess.

 

What about the first deduction being incorrectly claimed - for your business partner's car?

 

Does your business partners trust get the same amount as yours?

 

Thats the business partners problem because its their trust.

 

Both Trusts get the same amount.

If I recall correctly, I think the Trust will be paid as a "Management Fee" from the company, not as a dividend.

I couldn't give a rats if my partners Trust has done anything incorrect, it has nothing to do with me, my Trust or the company.

If selling my car to my Trust isn't 100% above board I won't be entertaining the idea at all, it's just something that popped into my head the other day.

I've zero interest in doing a shonky, I'm happy with what we earn as a company and I'm happy to pay the correct share of taxes based on that, equally though, if there's a legit way of minimizing those then I'd be dumb not to explore them.

 

Why keep the tax credits in the business company?

 

Not sure I follow, what do you mean?

 

Management fees you pay full tax. Take franked divs you get the franking credit.

 

It all comes out in the wash at end of the day though doesn't it?

Ultimately, whatever way we pull money out of the company/trust etc by the time the books are all cooked and the personal returns are submitted isn't the end result the same? (Unless say you're retaining profit in the company or adding a bucket company to the trust etc).

 

If when you wind up or sell the company.....

 

The company isn't worth anything to sell, "we" are the company in essence. Without us, the company wouldn't get any business and neither does it hold any assets. The company as it is is just the required structure to allow us to do what we do in an above-board manner.

Once one of us retires the balance of the company will be transferred to the other if they want to keep it going.

If we both retire the company will just dissolve.

 

And what happens to the franking credits?