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FAQs

Find the answers to the most commonly asked questions. Can’t find your answer? Feel free to give us a call - we are only too happy to help
Car Lease

If the vehicle is used for business for at least 50% of the time, then a car lease could suit you as you may be entitled to claim your leasing costs as a tax deduction.

If your employer supports salary packaging, then you could also benefit from a novated lease.

Yes, you could also choose to finance your vehicle through a chattel mortgage or commercial hire purchase.

Yes, you can. At the end of the lease period, the finance company will sell you the vehicle for the remaining balance on the car, also known as the residual value, plus GST.

Yes, you need to pay GST on each of your monthly lease payments and on the final cost balance should you opt to buy the car at the end of the lease.

Fortunately, if you are registered for GST, then you may be able to claim some or all of the GST as an Input Tax Credit on your next Business Activity Statement (BAS).

You may be able to claim tax deductions on your car lease, but we recommend speaking to your accountant for more information.

Some of the advantages of a car lease include:

  • The ability to reduce monthly payments by opting for a larger final payment.
  • Flexible lease terms from two to five years.
  • Potential tax deductions for business owners.
  • No GST on the original purchase price of the vehicle.

The car lease is tailored more towards business owners than those looking for a car for personal use. In simple terms, it works like a long-term rental where the finance company buys the car on your behalf and leases it to you for an agreed upon monthly fee.

At the end of the lease agreement, you have the option to pay a final payment (the residual value) and then take ownership of the car. You can also opt to refinance that final payment or trade the vehicle in and start a new lease.

Chattel Mortgage

Some of the benefits of a chattel mortgage include:

  • Flexible loan terms of two to five years.
  • Choose a final payment (residual value) up to 50% of the loan depending on the age of the vehicle.
  • Potential tax deductions for business owners.
  • Potential Input Tax Credits for those registered for GST.

Yes, there are. Business owners could opt for a car lease or commercial hire purchase while employees can also opt for a novated lease if their employer supports salary sacrificing.

The chattel mortgage is ideal for business owners and those who use their vehicle mostly for work purposes.

If you are registered for GST on a cash accounting basis, then you may be able to claim the GST from the purchase price of the vehicle as an Input Tax Credit on your next Business Activity Statement (BAS). Speak to your accountant about this.

GST must be paid on the purchase price of the car, but if your business is registered for GST on a cash accounting basis, then you may be able claim the GST from the purchase price of the vehicle as an Input Tax Credit on your next Business Activity Statement (BAS).

If you use the vehicle for business purposes, then you may be entitled to claim a tax deduction on the interest charges. You may also be able to claim a deduction on the depreciation value of the car up to the depreciation limit set by the Australian Tax Office.

A finance company lends you the money to buy a vehicle on the understanding that you will use it mostly for work purposes.

You own the vehicle from the start of the loan term, but the finance company will take out a mortgage over the vehicle as security for your loan. Once you make the final payment, they will then remove the mortgage.

Commercial Hire Purchase

This is a product tailored for business owners and those who use their vehicle for work. It is an agreement between you and a finance company whereby they buy a vehicle on your behalf and then hire it back to you for a set period.

At the end of the term, you can opt to make a final payment (residual value) and take full ownership of the vehicle.

The benefits of this type of finance include:

  • Flexible loan terms of two to five years.
  • Choose a final payment (residual value) up to 50% of the loan depending on the age of the vehicle.
  • Pay a deposit to lower your monthly payments.
  • Potential tax deductions for business owners.
  • Potential Input Tax Credits for those registered for GST.

GST must be paid on the purchase price of the car, but if your business is registered for GST on a cash accounting basis, then you may be able claim the GST from the purchase price of the vehicle as an Input Tax Credit on your next Business Activity Statement (BAS).

If you use the vehicle for business purposes, then you may be entitled to claim a tax deduction on the interest charges. You may also be able to claim a deduction on the depreciation value of the car up to the depreciation limit set by the Australian Tax Office.

GST is also payable on any term charges or fees.

Commercial hire purchase is perfect for businesses or individuals that use the vehicle predominantly for work purposes.

If you are registered for GST on an accruals or cash accounting basis, then commercial hire purchase is a great option as you may be able to claim the GST from the vehicle’s purchase price as an Input Tax Credit on your next Business Activity Statement (BAS).

You may also be entitled to claim any interest charged as Input Tax Credits for the duration of the loan.

Yes, there are. An individual can opt for a chattel mortgage, a novated lease, or a car loan while businesses may opt for a chattel mortgage or a car lease.

Car Loan

Sometimes called a secured car loan, this is when a finance company lends you the funds to purchase a car. They will secure the loan against the vehicle, and once you make your final payment, the car belongs to you.

Some of the benefits of a car loan include:

  • Flexible loan terms of two to seven years.
  • Choose a larger final payment (residual value) to reduce monthly payments.
  • Fixed interest rates.
  • Potential tax deductions for business owners.
  • With the loan secured against the vehicle, interest rates are often lower.

As a car loan is a personal finance product, you must pay GST on your payments. However, if you use the car for business, you may be able to claim a tax deduction. Visit the Australian Tax Office website for more details.

A car loan is ideal for people who use a car for personal use but who do not have the option of a novated lease through their employer.

Personal Loan

Sometimes called an unsecured loan, the personal loan involves a finance company lending you the funds to purchase a vehicle for personal use. As the loan is not secured against the vehicle, you will own the car from the time of purchase.

Some of the benefits of a personal loan include:

  • Flexible loan terms of two to seven years.
  • Fixed interest rates
  • Choose a larger final payment (residual value) to reduce monthly payments.
  • Potential tax deductions for business owners.

As a personal loan is a personal finance product, you must pay GST on your payments. However, if you use the car for business, you may be able to claim a tax deduction. Visit the Australian Tax Office website for more details.

This is a good option for those who may want to purchase an older or lower value vehicle that does not qualify for a secured loan. While a personal loan does have its advantages, a car loan or novated lease is a cheaper option.

Novated Lease

A novated lease is a three-way agreement between you, your employer, and a finance company. The finance company agrees to lend you the money to buy a car while your employer agrees to deduct your monthly payments from your salary.

Your lease payments and agreed upon running costs are taken from your pre-tax salary which means that you pay less tax.

However, the novated lease is a not a business finance product, and anyone can benefit from it as long as their employer supports salary packaging.

The novated lease offers benefits for both employer and employee.

Employee benefits include:

  • Tax savings through repayments made with pre-tax dollars.
  • Freedom to purchase the car of your choice.
  • You own the car.
  • You can change jobs and take your lease with you (as long as your new employee offers novated leasing).
  • Lease payments are fixed.
  • Flexible lease terms of one to five years.
  • All finance and operating costs are GST and income tax exempt.

Employer benefits include:

  • An excellent employee benefit at no cost to the business.
  • No need for a company fleet if the employee agrees to use the car for work.
  • No residual value risk associated with a company fleet.
  • No responsibility for the vehicle if the employee leaves.
  • These vehicles are neither an asset nor a liability.
  • Reduce Payroll tax and WorkCover premiums.

Anyone who works full-time or permanent part-time and whose employer supports salary packaging.

The vehicle’s finance.

Your comprehensive insurance.

Registration.

Fuel.

Maintenance costs. (tyres, servicing, repairs etc.)

Roadside assistance.

Luxury Car Tax

This is a tax that you must pay on any new or used vehicle where the total purchase price including GST (but excluding other fees and charges) is above the luxury car tax threshold.

The tax is only applicable to the amount that is above this threshold.

Luxury car tax rates may change each year so make sure to check the Australian Tax Office website for the current rates.

Your luxury car tax is often included in the price quoted by your car dealer.

Primary producers and tourism operators could be entitled to claim a refund of as much as $3,000 on any luxury car tax paid depending on certain criteria.

You need to pay luxury car tax if the total purchase price of your car including GST exceeds the luxury tax threshold. The tax is 33% on the amount the is above the threshold.

To figure it out you must follow these steps.

  1. Calculate the total purchase price of your car including GST only.
  2. Subtract the current luxury threshold figure from the car’s price.
  3. Divide that figure by 1.1 to subtract the GST.
  4. Multiply your new figure by 33%.

Remember that you must use the current threshold and that ‘green’ cars will have a different threshold.

Yes, there are. The following vehicles are exempt from luxury car tax.

  • Cars with a total purchase (including GST) that is below the luxury tax threshold.
  • ‘Green’ cars with a total purchase (including GST) that is below the luxury tax threshold for fuel-efficient cars.
  • Commercial vehicles not designed primarily for passenger use.
  • Vehicles that have been modified for transporting wheelchair passengers.

You will pay less tax thanks to the higher threshold for ‘green’ fuel-efficient cars. Fuel-efficient cars are those with a combined-cycle fuel consumption of 7L per 100km or less.

Primary producers or tourism operators may be entitled to a refund.

These refunds apply to the purchase of eligible vehicles but are capped at $3,000 per vehicle. Primary producers can claim a refund on one eligible vehicle per financial year while tourism operators can claim a refund on all eligible vehicles.

Luxury tax is always paid upfront in the purchase price of the vehicle with refunds then claimed back from the Australian Tax Office.

Insurance

Comprehensive car insurance will cover your vehicle for almost anything that goes wrong. Whether it’s theft, fire, accidental damage, or damage by a third party, comprehensive insurance will cover you even if you’re at fault.

If you need comprehensive insurance, then we can help you find a package that suits your needs. This package can be for the market value or the agreed value of the car. The market value is how much your insurer considers the car to be worth at the time of your claim while the agreed value is a value that both you and your insurer agreed upon at the time of purchase.

Comprehensive insurance is compulsory when financing a car. The idea is that should you damage your car, then you have the peace of mind that the insurance will cover it if you can’t afford the repairs.

Any damage resulting from a collision

Theft

Vandalism

Natural events such as fires, storms, earthquakes, and floods.

Accidental damage.  

Extended Warranty

An extended warranty covers you in the case of mechanical failure when the vehicle’s manufacturer warranty has expired. We can provide this type of warranty, and we can even give you the optional benefit of emergency accommodation, hire car, and breakdown recovery if you’re more than 150km from home.

Once your manufacturer warranty runs out, you are liable for any repair costs in the event of mechanical failure. If you plan to drive the car beyond this period of cover, then an extended warranty is a good idea.

Our extended warranty will cover you for an additional three years or until your car hits the 200,000km mark.

No limits on your claims (up to the value of the vehicle).

Choose your own licensed servicing dealer.

Transfer your warranty to a new owner when selling your car.

Underwritten by Lloyds of London.

Pay your premium in one go or monthly/fortnightly/weekly installments.

Motor Vehicle Stamp Duty

This is a government tax that you must pay when you register or transfer the ownership of any motor vehicle.

How much you pay depends on the vehicle’s market value including GST. Stamp Duty must be paid to your state’s tax revenue office within 14 days of buying or transferring the vehicle. Some concessions are available so best to get in touch with your local tax office for further details.

This is usually included in your on-the-road costs and paid on your behalf by the dealer. When buying privately, you are responsible for paying stamp duty to your local tax office within 14 days.

Motor vehicle stamp duty in Victoria is calculated using the dutiable value of passenger and non-passenger cars and other vehicles.

Dutiable value

Rate of duty

New passenger cars
$0.00 - $65,094.00

$8.40 for every $200 value or part thereof

Luxury passenger cars
more than $65,094.00

$10.40 for every $200 value or part thereof

New non-passenger cars*

$5.40 for every $200 value or part thereof

Used non-passenger cars

$8.40 for every $200 value or part thereof

* vehicle primarily designed for carrying goods, includes utility and dual cab ute Application for registration or transfer registration of a previously LMCT (car dealer) registered high value vehicle Where: The vehicle is a 'passenger car' The vehicle is acquired within 60 days of the initial LMCT registration, and No duty has been paid on or since the initial registration of the vehicle

Dutiable value

Rate of duty

$0.00 - $65,094.00

$8.40 per every $200 value or part thereof

More than $65,094.00

$10.40 per every $200 value or part thereof

Motor vehicle stamp duty in New South Wales is derived from the full value of the new car or vehicle, or the sale price or market value of a used vehicle (which ever amount is greater).

Dutiable value

Rate of duty

$0.00 - $45,000.00

$3 duty for every $100 value or part thereof

More than $45,000.00

$1350, plus $5 for every $100 value or part thereof

Motor vehicle stamp duty in Queensland is calculated upon the dutiable value and engine size of the car or vehicle. The dutiable value for new motor vehicles is the total price list of the vehicle including all items of optional equipment. The dutiable value of a used vehicle is the greater of the sale price of the vehicle, (including deposit and the cost of all optional equipment) or the market value of the vehicle.

No. of cylinders or rotors

Rate of duty

All hybrid and electric vehicles

$2 for every $100 value or part thereof

1 to 4 cylinders, or 2 rotors

$3 for every $100 value or part thereof

5 or 6 cylinders,
or 3 rotors

$3.50 for every $100 value or part thereof

7 or more cylinders

$4 for every $100 value or part thereof

Motor vehicle stamp duty in South Australia is calculated on the declared value of the car or motor vehicle. The dutiable value of a new motor vehicle is the recommended retail price or manufacturers price list (inclusive of GST or Luxury Car Tax, where applicable). The value of a used vehicle is the calculated upon the greater of the vehicle market value or the purchase price.

Dutiable value

Rate of duty

$0.00 to $1,000.00

$1 for every $100 value or part thereof,
with a minimum of $5.00 payable

$1,000.01 to $2,000.00

$10.00, plus $2 for every $100 value
or part thereof over $1,000.00

$2,000.01 to $3,000.00

$30.00, plus $3 for every $100 value
or part thereof over $2,000.00

More than $3,000.00

$60.00, plus $4 for every $100 value
or part thereof over $3,000.00

Motor vehicle stamp duty in Western Australia is calculated upon the dutiable value of the car or vehicle. The dutiable value of a new motor vehicle is the retail selling price of the vehicle plus any amount paid for optional features. The dutiable value of a used vehicle is the purchase price of the vehicle including any dealer delivery charges or accessories.

Dutiable value

Rate of duty

$0.00 to $25,000.00

2.75% of dutiable value

$25,000.01 to $50,000.00

2.75% of dutiable value, plus
((dutiable value - $25,000) / 6,666.66)%
of dutiable value

More than $50,000.00

6.5% of dutiable value

The amount of motor vehicle stamp duty payable in Tasmania is derived from the dutiable value of the car or vehicle. The dutiable value of a new motor vehicle is the consideration paid for the vehicle, disregarding the value of any trade- ins. The dutiable value of a used vehicle is the greatest of three options; the consideration paid for the vehicle, the market value of the vehicle at the time the vehicle was acquired or the value of the vehicle at the time of application to register the vehicle.

Dutiable value

Rate of duty

$0.00 to $600.00

$20.00

$600.01 to $35,000.00

$3 for every $100 value or part thereof

$35,000.01 to $40.000.00

$1050, plus $11 for every $100 value
or part thereof over $35,000.00

More than $40,000.00

$4 for every $100 value or part thereof

Motor vehicle stamp duty in the Northern Territory is calculated using the purchase price of the car or vehicle, new or used, including any additional equipment and accessories fitted to the vehicle.

Dutiable value

Rate of duty

All vehicles

$3 for every $100 value or part thereof

Motor vehicle stamp duty in the Australian Capital Territory is derived from the dutiable value and Green Vehicle Rating of a car or other vehicle. The dutiable value of your vehicle is the retail selling price of the vehicle plus any amount paid for optional features. The Stamp Duty payable for new vehicles, with a Green Vehicle Rating is calculated using the tables below. Used vehicles, or vehicles with no Green Vehicle Rating, calculate stamp duty at the same rate as C-rated motor vehicles in the table below. First determine the Green Vehicle Rating of your car:

Green Vehicle Rating

Green Vehicle Stars

A

5 star

B

4 to 4.5 star

C

3 to 3.5 star

D

1 to 2.5 star

Then use that rating, and the value of your vehicle, to determine the rate of stamp duty payable:

Green Vehicle Rating for vehicles valued at $45,000 or less

Rate of duty

A- rated vehicle

Nil

B- rated vehicle

$1 for each $100 (or part thereof)

C- rated vehicle and vehicles without Green Vehicle Rating

$3 for each $100 (or part thereof)

D- rated vehicle

$4 for each $100 (or part thereof)

Green Vehicle Rating for vehicle valued at more than $45,000

Rate of duty

A- rated vehicle

Nil

B- rated vehicle

$450, plus $2 for each $100 or part thereof over $45,000

C- rated vehicle and vehicles without Green Vehicle Rating

$1,350, plus $5 for each $100 or part thereof over $45,000

D- rated vehicle

$1,800, plus $6 for each $100 or part thereof over $45,000

Personal Property Securities Register

The Australian government created the PPSR so finance companies and other businesses could register their security interests over personal property. Other parties are also allowed to search and view these security interests.

In this instance, personal property is considered to be a form of property that is not land or buildings. This includes items such as cars, machinery, art, crops, intellectual property, licenses, and contract rights.

Personal property security is when a lender or finance company uses this type of property as security against a loan. They place their interest in the property on the register, and if you fail to make your payments, they may then take possession of the property.

The PPSR benefits both finance companies and car buyers.

Lenders can avoid incurring losses if a customer defaults on their loan.

Car buyers can check if a vehicle has a security interest over it. This helps them avoid buying a car that could still be repossessed if the original owner had defaulted on the loan.

You can search the PPSR for a fee at http://www.ppsr.gov.au

Other

The Australian Tax Office (ATO) gives small businesses the chance to claim a tax deduction of $5,000 on the purchase of any vehicle over the value of $6,500. It also allows the business to claim a tax deduction on the depreciating value of the vehicle by adding the purchase price to their small asset pool.

Business owners who want to calculate how much they can claim for can follow this method. First, subtract $5,000 from the value of their vehicle and then deduct 15% from this figure for the first year and 30% for and subsequent years they owned the vehicle.

Further information is available on the ATO website.

If a small business has a combined annual turnover of less than $2 million, it’s eligible for an immediate tax deduction on any assets purchased that are less than $20,000 in value.

These assets can be new or old, but they must have been purchased between a specific timeline of 7.30pm (AEST) 12th May 2015 and 30th June 2018.

Any item that you use for running your business is 100% tax deductible.

These items include but are not limited to: cars, utes, vans, motorbikes, trailers, lawnmowers, fridges, ovens, coffee machines, tables, kitchens, chairs, carpets, photocopiers, printers, tools, welding equipment, generators, pumps, saws, solar panels, hot water units, heating units, water tanks, air con units, computers, and sound and security systems.

Other items such as capital works and plants are not tax deductible as their value depreciates differently.

For the full list of items, you can visit the ATO website.

These items can go into the small business simplified depreciation pool and can then be depreciated at 15% for the first income year and 30% for each subsequent income year.

Drive away happy with these benefits

ITP Car Loans together with Stratton Finance are proud to be part of the carsales network. With combined experience of decades in the industry, we can offer you first-class consultative services for all your financing needs.

NO DEPOSIT OPTIONS

No deposit finance options are available, so you may not need any cash upfront.

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PRIVATE OR BUSINESS

Finance options to suit a variety of customer circumstances. 

QUALITY SERVICE

We like to understand your needs before presenting you with finance options to ensure you’re getting a deal that meets your needs.

COMPETITIVE DEALS

We have access to great deals and a wide range of lenders offering a variety of flexible tailored finance options.

ITP A TRUSTED NAME

As a one-stop-shop for all your financial needs ITP “The Income Tax Professionals” have an established reputation in taxation, financial planning, home loans, Car loans and SMSFs across Australia.

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