Cancelling GST & transferring car out of entity
If you are expecting to earn less than $75,000 in the next 12 months (i.e. $6,250 or less this month and $6,250 for the next 11 months), then you could deregister for GST.
(Note if you are expecting to be more than this then you should register if you haven’t already).
The 4 minute video below discusses the ATO views on how to pay back GST on your car (or other business assets) that you have claimed GST on.
Broadly you pay back at the lower of market rate or purchase x business use claimed.
E.g. You bought a car for $27,500, you would have claimed $2,750 if you had a chattel mortgage or paid cash.
(If you had a HP you would be claiming GST on each instalment).
If you then cancel GST less than 5 complete tax years before the purhase (which is really 6 tax return I believe),
then you’d need to pay back at market value.
I.e. say $11,000 market value x 100% expenses claimed = $1,000 payback.
This is done as an adjustment in your final BAS. It is also something your accountant can do for you as an amended BAS.
I know that some taxpayers continue to keep entities running to continue to claim GST credits (as it is 1/11th off your puchase price of business expenses).
But to me, when you factor in the cost of others and your time in bookkeeping, BAS and accounting fees for your entity (or you as sole trader) then it may not be worth it.
I try to help clients claim what they can legally claim, but at the same time – I try to help them to have more time to do the things that matter – whether that is generating more income for your business or spending more time with your children or grandchildren.
Hope you enjoy the video – please let me know if you have any other questions that I can answer.
The other point I mention was the cost of stamp duty to transfer a car to individual names – currently for NSW this is 3%, with 5% above $45,000 value.