When selling a car, when is less more?

Did you know there are times when a not-for-profit organisation is better off to sell a car a lower price?

The reason for this is the effect of GST.

Organisations that are endorsed by the Australian Taxation Office as a charitable institution and / or a Public Benevolent Institution are subject to the Non-Commercial Activities Test when calculating the GST payable on the GST supplies they make.

The rule as it applies to cars is as follows:

If you sell a car in your fleet for more than 75% of what it cost you, then the sale is subject to GST and you must pay to the Tax Office 1/11th of the sale proceeds.

HOWEVER...

This means there are times when you should and should not sell your cars. If you were to dispose of a car at the wrong price on a car that cost you $33,000 it could cost your organisation in excess of $2,200 in extra GST!

Community Fleet Services has the expertise and experience to ensure that your disposal strategies are optimised.

If you need advice on this GST matter or any other area of your fleet management please contact us or complete our online free fleet assessment by clicking here.

In excess of $50,000,000 a year moves out of the Not-For-Profit sector as a result of inefficient fleet policies