May 4, 2010

Car as tax deductible

I am not and accountant or even a tax lawyer. So, please lay off the comment on my understanding of tax which is skewed more towards how I can save from paying the government than how I can plan my tax. Basically, I think the term 'tax planning' is the same as 'I am not going to pay the government money and all I want is for the money I earn to be enjoyed by me (and maybe those close to me)'. So, that is why this year, for the past few blogposts, you can see how much money I have spent in keeping my staff entertained. You do know that any money spent on your staff can be deducted from your tax right? All of it, except for transportation (I wonder why?)

Anyway, talking about transportation, we have decided to finally buy a car for our company. Not just any car. It can even be described as one of the few dream cars a few in the world would love to have. And no, I am not buying it for myself but as one of the partner in this two-person show of a legal firm, we have unanimously decided for my beautiful partner to have one of her dream car as our first company car.

In Malaysia, any company, even a partnership like us, can get a tax deduction of RM150,000-00 for any car which purchase price is below RM150,000-00 but that amount will be cut to RM100,000-00 if the car is priced at more than  RM150,000-00. I wonder where do they get the RM150,000-00 from but I suspect it have to do with the price of the most expensive Malaysian car which is just around RM110,000-00. Then the car must also be brand new as any second-hand or reconditioned car, the deduction may be cut into half of the amount spent by the company. And if there is a car loan involved then the amount which can be deducted from that year tax is the amount spent in paying the deposit and the car loan. Not the total purchase price of the car. Clear?

Some will question the choice of the car as too flashy or too impracticable for a company car but it must be pointed out that we are still below the age of 40 and we are not the type who are driven around but we are those who love to drive. So, a sport car for my partner is just perfect.

And it does not mean that we are so cash rich that we can just buy the car with one eye close (like a few of our politicians) but there is this invention called a car loan where you only have to pay a certain amount of cash and get a loan for the balance of the purchase price. Of course, we do have to watch out on our cash flow in which we have to maintain a certain collection momentum in order for us to be able to maintain the monthly payment. Maybe one day when a few of our corporate clients really appreciate our contribution to their bottom line, we can buy it in cash....

By the way, here is the look of the new car with my partner beside it which hopefully will be out in a few week. And mind you, it is NOT a brand new car but as is usual in Malaysia, it is a reconditioned car which has a warranty of 3 years from the car dealership.

1 comment:

Alpha Lim said...

awesome pawsome!

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