Costs, Leases, and Taxes
As the business owner, you will have to pay for the registration, insurance, maintenance, and fuel costs of your vehicle. Remember these expenses when you budget for the company car or fleet.
Your company may enter into a three-way agreement with an employee and a leasing company to pay for the car in what’s called a novated lease. You make the lease payments out of your employee’s pre-tax income, thus reducing their taxable income and providing them with a car. You’ll need to have a clear contract that details the conditions for using the car and any costs involved with it.
In many cases, you may be required to pay the fringe benefits tax (FBT). This happens if your business allows you or your employees to use a company car for private purposes. This may include:
- Garaging the car at or near an employee’s home, even if they don’t have permission to use it privately.
- Garaging the car in a home that’s also the place of employment.
- Using the car to travel to and from work.
To know for certain if a novated lease is best for your situation or if you need to pay the FBT, consult your tax agent.
Vehicle Surveillance and Employee Privacy
As the company car is an investment, you may want to track its location for security reasons. Many affordable GPS trackers will tell you the vehicle’s location, speed, and other information. You are required to inform your employees if you wish to install this device.
According to the Workplace Surveillance Act of NSW, you must give written notice to any affected employees. You must do so at least 14 days before you start the surveillance or before they start their employment with you. Because the device records personal information, your employees must consent to it. If they do not and you still wish to track the vehicle, consult a lawyer. If your employees agree to the tracking, you must have a visible notice in the car that says that it is subject to GPS surveillance.
While there is no such act in Queensland yet, it’s still a good idea to give notice and get the consent of your employees before installing vehicle surveillance.
Accident and Damages
In the case where an accident happens involving the company car, you may be liable to pay for the damage, even if it was your employee who was driving. You may claim the sum from your insurance, but you may also pay for any excess.
There may be some cases where you won’t be required to pay for the damage. These may include:
- If your employee was driving for work but doing something illegal, such as driving under the influence of alcohol or drugs.
- If they were driving for work but intentionally caused the accident.
- If they were using the company car for personal reasons.
To know for certain whether you have to pay for damages, be sure to consult experts like those from the Motor Accident Legal Service. Their solicitors are specialists in personal injury and vehicle accidents, and they may assist you on a no win, no fee basis.