Read the leasing or buying vehicles guide on Business.gov.au to find out which option is better for you.
Investing in a major business asset, like a motor vehicle, is a big step for a small business.
Before handing over your hard earned money or signing any paperwork, there are some important factors to consider before committing to a vehicle purchase.
Consider your business needs
Before deciding whether your business needs a vehicle, it’s important to consider:
- How it will be used. Will the vehicle help you deliver goods, travel between work sites or long distances, or be used for marketing/to make a good impression?
- Running costs. The cost of fuel, maintenance, registration and insurance should all be considered as part of your operating expenses.
- Tax and finance. Will you buy the vehicle outright or look at leasing and/or financing options? Are there any tax related measures, like the instant asset write-off, that may help with the purchase?
Action to take
Buying a vehicle through your business vs personally
A common question many business owners ask is whether it’s better to buy a vehicle as a business or personal asset.
Here is a high level look at some of the pros and cons of each option.
| Purchase type | Pros | Cons |
|---|---|---|
| Buying as a business |
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| Buying as an individual |
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Action to take
Before making a decision, we recommend seeking advice from your accountant to assess the potential tax benefits and understand your record keeping requirements (eg: required vehicle log books).
Is it better to buy a new or used vehicle?
Finance will play a large factor in whether you decide to buy new or used. But some other pros and cons to consider include:
| Type of vehicle | Pros | Cons |
|---|---|---|
| New |
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| Used |
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Action to take
Read the Consumer Protection guides on buying a new car and buying a used car for more information on the pros and cons.
Check your consumer rights as a business
Your business vehicle will be covered under the Australian Consumer Law (ACL) if:
- The vehicle costs less than $100,000, or
- The good is a vehicle or trailer that is used mainly to transport goods on public roads.
These protections only apply when buying your vehicle from a car dealership. Read the Motor vehicles sales and repairs guide to understand your rights under ACL.
Tip
Vehicles purchased privately or via an auction generally will not offer a warranty period or guarantee, so if there is a problem with the vehicle it will be up to you to pay for any repairs.
Checks to do before buying a vehicle
Some key checks to perform before signing a contract of purchase, particularly for used vehicles, include:
- When buying from a dealership, check they are licensed.
- Use the Personal Property Securities Register (PPSR) to check if the vehicle has been written off, stolen, or if there is finance still owing on it.
- Assess the condition of the car and get a mechanical inspection, especially for used vehicles.
- Check the vehicle registration to ensure the details match what’s on file with the Department of Transport and that the registration is up to date.
Can you cancel a contract to buy a car?
In Western Australia, there is no cooling off period for contracts to buy a car, but you can withdraw from the process at any time before signing a contract. You may be able to cancel the contract of sale under the following circumstances:
- You have failed to secure finance, having made reasonable attempts. (NB: This only applies when the contract of sale is subject to finance.)
- The vehicle is significantly different from its description.
- False representations have been made relating to the car’s odometer reading.
- The contract terms don’t include the required sales forms for motor vehicle dealers, such as the prescribed particulars, terms and conditions.
Visit the Consumer Protection website to find out more about cancelling a contract to buy a car.
I’ve decided to buy the vehicle as a business, what else do I need to do?
- Use your Australian Business Number (ABN) when registering the vehicle.
- Notify your insurer that the vehicle is for business use.
- Maintain a vehicle logbook to claim vehicle related expenses in your tax return.
More information
- Visit the Consumer Protection website for more information on purchasing vehicles.
- Read the ACL motor vehicle sales and repairs guide.
- Sign up for the SBDC small business news to get the latest information to help you start and run your business
