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| Avoid double taxation on a vehicle purchase | |
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| Topic Started: Mar 9 2010, 08:11:17 PM (556 Views) | |
| aroth | Mar 9 2010, 08:11:17 PM Post #1 |
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Anklebiter
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So here's a tricky one. I'll be moving to Australia about 6 months from now, and in the interest of having the move go as smoothly as possible, I've been considering having a friend in Australia purchase a car on my behalf, and hold it for me until I get there. The logistics of the purchase are simple enough (well not necessarily simple, but straightforward and manageable). The tax and registration rules look like they could make things tricky, however. As I understand it, taxes are due on the market value of the vehicle whenever it changes hands. Meaning that if my friend purchases it, and then holds it until I get there, and then officially transfers ownership over to me when I arrive in Australia, the purchase is essentially taxed twice. Once when the car is actually purchased, and once when it is transferred to me upon my arrival. That is most undesirable. Does anyone have any experience with this sort of situation? Is there any way around the double taxation issue? I assume my friend can't just purchase the car in my name, as from what I understand about vehicle registration, the vehicle cannot be registered to me until I have a permanent address in Australia. Is this correct? One possibility I've come across is that maybe the transfer of ownership from my friend to myself constitutes a "repossession", which is tax exempt. Repossession in this case is defined in the registration transfer form as: "Owner has repossessed the motor vehicle pursuant to a hire purchase agreement or is an owner to whom the motor vehicle has been returned by the hirer voluntarily under a hire purchase agreement or on the termination of a hiring agreement" That seems pretty accurate to me, particularly the part about "returned by the hirer voluntarily". But I'm not sure exactly what "hirer" means in this context, or if my agreement with my friend constitutes a "hire purchase agreement". Can anyone shed any light on this? I'd like to avoid having to pay taxes on my vehicle twice, if at all possible. |
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| sheowahya | Mar 9 2010, 08:41:29 PM Post #2 |
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True Blue Mate
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You are correct, you will not be able to purchase anything in Australia until and unless you have a valid visa that grants such rights, and present yourself in person to complete the purchase. I might be able to offer you an option though. First, if your friend has an ABN for any reason, s/he can purchase the vehicle for you in the name of the trading entity. The GST would be claimed by that entity as an input credit (essentially refunded to the business entity). Then when the vehicle is transfered to you by way of sale from the business to you, you will pay the GST to the company who will then forward it on to the ATO, thus completing only one taxation of the vehicle. Unfortunately a "reposession" as you describe will not work as you are not in Australia and do not hold a visa that would allow you to enter a legally binding hire purchase agreement. Furthermore, such a reposession would be a severe black mark on the person or entity it is made against. A hire purchase agreement is a legal document that is put in place by the bank or finance company for the purchase of equipment. Again, you are required to present yourself in person in order to sign the legal documents. Unless you have found the absolute perfect car and it is one in a zillion, I suggest you just wait until you arrive to purchase a vehicle. Cars are a dime a dozen, and I don't think any car is worth the hassles you are putting yourself through. The process is simple enough, even for a new arrival. I think you are making the whole thing WAY more complicated than it needs to be by putting the cart before the horse. Once you arrive, your friend can take you around to dealers, there will be another, even better car available. And, I think prices are coming down as people here have tightened up the purse strings a bit and dealers are more desperate to close the deal. Speaking of desperate to close the deal... you mention that you'll be landing in about 6 months. Well... if you can manage to land before the end of June, you'll find dealers MUCH more desperate to close deals in June and early July as that is the end of the financial year, and they are always trying to lower their inventory value for tax reasons. Best of luck, Marilyn |
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My Timeline ======= Category 136 BN - Skilled Independent. Skills Assessment: Applied ICAA: 13May05 Addtional Classes Required: 08Aug05 Re-submitted PASA: 05Feb07 Approved as Accountant 2211-11: 26Feb07 Main Visa Application: Sent to ASPC: 12Mar07 Application received: 16Mar07 Acknowledgement received: 10May07 Credit Card Charged: 10May07 CO assigned: TBD Medicals sent UNrequested: 26Jul07 PPC sent UNrequested: 18Jul07 VISA Approved: 07Nov07 Main move to Australia: 17Apr08 | |
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| aroth | Mar 10 2010, 05:32:58 AM Post #3 |
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Anklebiter
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Thanks for the information. To clarify one point, however, I do currently hold a valid visa. It's a General Skilled Migration, subclass 175 visa. Wouldn't that give me rights to purchase vehicles and/or property in Australia? I get that my physical presence would still be required, but I should be covered as far as the visa is concerned. Also, is there anywhere you'd recommend looking for cars? None of the places I've looked so far (mostly carsales.com.au and a couple of other websites) have had what I'd call "dime a dozen" prices. If anything it looks like cars are about twice as expensive as in the U.S., with new models up in the $30k-$45k+ range, and used models with 100k kms or less still fetching somewhere in the $10k-$15k range. Is that typical, or are the online prices being overstated? |
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| crapola | Mar 10 2010, 12:42:43 PM Post #4 |
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True Blue Mate
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thats typical of everything here. you learn to live with it, just like us aussies have to do. |
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| anater | Mar 10 2010, 04:27:52 PM Post #5 |
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True Blue Mate
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I've found that most cars listed by a private party are close to what you would pay at a dealer. There is an online site called Redbook that lists the wholesale prices of vehicles, sort of like KBB in the US. We looked up the price of our Mazda on Redbook before taking it to the dealer for an offer. The dealer offered us right in the middle of the Redbook range. On a side note, I have a nice little Holden Astra listed with 90K, for $7,400. I am VERY motivated to sell as we're moving soon - hint hint, lol. |
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| gpierce | Mar 10 2010, 05:10:22 PM Post #6 |
True Blue Mate
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If you are looking for a late model car with low mileage then yes you are looking at the prices you see. If you just want a beater then you do that the same way as the US. Troll the neighborhoods looking for the hooptys parked on the side of the road and residential corner lots with for sale signs on them;) I saw a halfway decent looking Corolla on a side street recently with For Sale $1200 on the windscreen:) Greg |
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| sheowahya | Mar 10 2010, 08:06:05 PM Post #7 |
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True Blue Mate
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Sorry to say, but I have to agree with everyone. Cars are megaspensive here, new or used. |
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My Timeline ======= Category 136 BN - Skilled Independent. Skills Assessment: Applied ICAA: 13May05 Addtional Classes Required: 08Aug05 Re-submitted PASA: 05Feb07 Approved as Accountant 2211-11: 26Feb07 Main Visa Application: Sent to ASPC: 12Mar07 Application received: 16Mar07 Acknowledgement received: 10May07 Credit Card Charged: 10May07 CO assigned: TBD Medicals sent UNrequested: 26Jul07 PPC sent UNrequested: 18Jul07 VISA Approved: 07Nov07 Main move to Australia: 17Apr08 | |
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| aroth | Mar 17 2010, 08:08:02 PM Post #8 |
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Anklebiter
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Thanks for all the advice. To follow up a bit, it turns out that it is possible to avoid the double taxation issue, and to have a car registered in your name even if you are not presently in Australia. The trick was just to have my friend purchase the car in my name from the outset. Doing so only requires going through a few minor hoops. First, you need to submit sufficient documentation to establish Evidence of Identity. In my case my U.S. passport and bank card was sufficient. Then you need proof that you will be residing at an Australian address at some point in the future. The rental agreement for my temporary accommodations proved sufficient there. After that it was just a matter of signing and then scanning/e-mailing a couple of forms. I had to sign a "Letter of Authority" authorizing the dealer to transfer the registration over to my name, and a "New Customer Application" for the Queensland DMV. So long story short, I now have a 2005 Ford Falcon, with 39,000 kms on it (previous corporate fleet vehicle). It was purchased from a dealer for $13800, which includes registration, CTP, stamp duty, and a 1 year warranty (so 6 months will be left when I actually take possession of the car). Seemed like an okay deal to me. My friend is actually going to park it in a private yard and de-register it until I get there. He'll drive it around the yard every once in a while to keep the battery fresh and whatnot. I know this is all well in advance of when the car is actually needed, but it takes care of one of the biggest question marks in my moving plan. To me, that makes it seem worth it. I'm bringing my surfboard over on the plane with me, so having a car lined up that I know is large enough to accommodate it gives me one less thing to worry about. The plan is for my friend to meet me at the airport with it, at which point we can just load the car up with our stuff and go. Anyways, just wanted to point out that it is actually possible for migrants to purchase a car in their name prior to arrival. It requires a bit of effort, and a trustworthy and reliable contact to work as the intermediary, but it can be done. |
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| blarg | Mar 17 2010, 11:16:46 PM Post #9 |
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True Blue Mate
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Thanks for the info, and I'm glad it all worked out for you! |
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| shylady | Mar 17 2010, 11:32:49 PM Post #10 |
oldYank
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ditto! Good job! 
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"I could’ve turned a different corner, I could’ve gone another place... " ku,'09 | |
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