Who should own a business car: the Company or Me?
A car purchased has certain advantages for the owner, be it the owner or employee. In this situation, lets look at the business ownership vs individual ownership:
Beforehand, let me share to you on what are acceptable expenses for the usage of the car or trucks:
The actual use of the car for business purposes like petrol, tolls, maintenance or upkeep of vehicle excluding personal travelling or commuting to business from home.
The benefits of business ownership:
- The company will be able to capture the depreciation expenses when the car hits the road. In Malaysia, the standard depreciation rate for the motor vehicle each year would then be 20%.
2. The general auto expenses for business use like petrol, upkeep, tires & insurance is deductible.
3. Interest on the car loan is deductible as recorded as necessary business expenses.
4. For some cases, insurance for company-owned car might be cheaper than business owner ownership car as business can get leased-car rates.
5. If the business-owned car is involved in accident, the driver's personal insurance and liability is limited (it applies to Sdn. Bhd. ownership).
The business owner (employer) ownership:
- The business owner can lease the car to the company due to company use of the vehicle.
2. Loan interest is not deductible.
3. Only un- reimbursed business expenses may be deductible and you cannot take those tax deductions for the expenses if it is reimbursed by the business.
What about leasing a car for business use by staff?
If you lease a car for a staff, basically you do not have much control over the maintenance, mileage or beneficial but if the company owns the car, the company will have the control on the usage and keeping cost low.
Therefore, the business can consider of buying the car for employees if they are to drive them for business.