Benefits of buying a car through your business – Part 2

We recently wrote about the benefits of buying a car through your business.  And one of the comments we made were that“FBT adjustment needs to be done annually – this is put through the books at year end as a book entry.  No monies are payable to IRD” 

A reader asked us this question “we have been paying FBT on a company-owned vehicle for years. I understood that was required where there was any component of personal use allowed.”  

The clarification Karen Tobeck gives is “that If the car is provided to a shareholder then the way around paying the FBT is to do an adjustment at year end which negates the personal use value.  This adjustment is done through the shareholder current account. Overall there is no difference in value whichever way you do it but it avoids actually having to pay over the cash to IRD.”

Karen will be more than happy to give you more information on how this applies to your company car if you wish to call her on 09 273 3682

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