Uber Drivers Forum banner

Personal vs. Rental (After tax)

  • Personal

    Votes: 9 50.0%
  • Rental

    Votes: 9 50.0%
1 - 20 of 42 Posts

·
Registered
Joined
·
1 Posts
Discussion Starter · #1 ·
Hi,

Once you take into account Tax deductions and zero responsibility for the car, I'm wondering if you're better off using a rental car for Uber?

Let's say the average rental amount is $250/w (I've seen some as low as $170/w, but there are additional signup fees which negate this "cheap" price), it seems like a large sum of money vs weekly profit. However, considering it includes all maintenance, insurance, roadside, unlimited K's and no depreciation, plus you can deduct the amount from your taxable income, is there much difference?

I really like the idea of a car with no responsibility, has anyone gone down this "route", how does it compare?

Thanks,

E.
 

·
Premium Member
Joined
·
4,284 Posts
Hi,

Once you take into account Tax deductions and zero responsibility for the car, I'm wondering if you're better off using a rental car for Uber?

Let's say the average rental amount is $250/w (I've seen some as low as $170/w, but there are additional signup fees which negate this "cheap" price), it seems like a large sum of money vs weekly profit. However, considering it includes all maintenance, insurance, roadside, unlimited K's and no depreciation, plus you can deduct the amount from your taxable income, is there much difference?

I really like the idea of a car with no responsibility, has anyone gone down this "route", how does it compare?

Thanks,

E.
Forget about those cheap offers you find on places like gumtree. When you add in the extras, which you really cannot do without, they cease to be competitive. Whats more, do you really want to be dealing with an outfit which is dishonest from the start?

Next you have to decide on a low(er) weekly rental with limited km or a higher weekly fee with unlimited km. Splend for instance has a 1000km limit, which I think is too low. Europcar has a 1500km limit, which is fine. Others like rentodrive have unlimited km, which I like.

I have done the sums and for a fulltime Uber driver, renting is the way to go. Partime, it may not be the right choice unless you have difficulty in obtaining finance.
 

·
Registered
Joined
·
654 Posts
Id suggest getting advice from an accountant
True.
Another oft missed consideration is do you want to be another uber driver in an i30 or carolla, or would you like to stand out and have pax have great first impression with a "wow dude, nice XXXX I've never been in one of these before" I know my kizashi gets lots of comments (compliments), but for my swift its just "huh, I didn't think you could uber in a car this small"
 

·
Registered
Joined
·
1,107 Posts
Mr F.I.
How is the Kizashi?
I have a SX4, which although smaller on the outside than the Kizashi, has similar internal space.
Don't know why, but part of me wants to update the SX4, even though it's going perfectly well.
The other car I could consider is a Skoda Yeti, but having had euros in the past, in a but scared or unexpectedly high repair bills.
And we all know that the Suzis are near enough bulletproof.

Back to the OP, if I was full time Uberibg, then for my next car, a rental would be the way I'd go....
 

·
Registered
Joined
·
654 Posts
Mr F.I.
How is the Kizashi?
I have a SX4, which although smaller on the outside than the Kizashi, has similar internal space.
Don't know why, but part of me wants to update the SX4, even though it's going perfectly well.
The other car I could consider is a Skoda Yeti, but having had euros in the past, in a but scared or unexpectedly high repair bills.
And we all know that the Suzis are near enough bulletproof.

Back to the OP, if I was full time Uberibg, then for my next car, a rental would be the way I'd go....
Zashi is in a word 'awesome'. As I tell pax, not the most expensive car I've owned but easily the best. Engineering is truly master class. The paintwork however... Oh the paint! Does not handle 40 degree sun and salt (Byron) well. So I spent 2k and had it all redone. (Its 2013 model). Worth the 'serious coin' I think b'cuz I like looking like hot shit, midnight blue metallic. Drive the SX4 into the dirt and flip it man, that's my plan for the zashi, but ask rooneytuned Skoda's get nice compliments to, and his is a weapon, (walnut panels n all), but I think Skoda repairs would be cheaper than VW/Peugeot...
 

·
Registered
Joined
·
287 Posts
Rental any day and issues I get a brand new one they look after all rego insurance servicing tyres roadside assist and excess for a accident is only 600 dollars and I get a new car that day it's 250 a week I get unlimited kms also
 

·
Premium Member
Joined
·
103 Posts
Full time driving i'd say renting is a no brainer, part time, no way, especially not in the sticks here.
Re: Skoda. They recently brought in fixed priced servicing, applicable to any car (i think) so you know what you pay. I think most VAG cars are sort of exy to service but Skodas are cheapest of the lot. Just did water pump, timing belt general service, about $1500 that's a diesel. Just make sure it's serviced regularly and it'll go forever and give the 7 speed DSG a miss. Sorry, but i can't trust a gearbox with no oil.
Mine is a Superb Elegance, so much room in it. Everyone thinks it's brand new and it's an Uber black/XL but it's 7 years old with 115k on it. Never had an issue. On the highway, 1100k plus on a 55 litre tank, easy.
Best car i've ever owned.
 

·
Registered
Joined
·
406 Posts
Forget about those cheap offers you find on places like gumtree. When you add in the extras, which you really cannot do without, they cease to be competitive. Whats more, do you really want to be dealing with an outfit which is dishonest from the start?

Next you have to decide on a low(er) weekly rental with limited km or a higher weekly fee with unlimited km. Splend for instance has a 1000km limit, which I think is too low. Europcar has a 1500km limit, which is fine. Others like rentodrive have unlimited km, which I like.

I have done the sums and for a fulltime Uber driver, renting is the way to go. Partime, it may not be the right choice unless you have difficulty in obtaining finance.
This thread has been done to death but nobody has fully convinced me that renting is the way to go. What part of your sums make renting a more viable option? For mine, the $20,000 instant write off makes owning a more attractive option.
 

·
Registered
Joined
·
254 Posts
Hi,

Once you take into account Tax deductions and zero responsibility for the car, I'm wondering if you're better off using a rental car for Uber?

Let's say the average rental amount is $250/w (I've seen some as low as $170/w, but there are additional signup fees which negate this "cheap" price), it seems like a large sum of money vs weekly profit. However, considering it includes all maintenance, insurance, roadside, unlimited K's and no depreciation, plus you can deduct the amount from your taxable income, is there much difference?

I really like the idea of a car with no responsibility, has anyone gone down this "route", how does it compare?

Thanks,

E.
Full time driving clocking 1800-2000kmper week, rental wins all day long. If only casual driving then personal is better. I'm in a rental vehicle now.
 

·
Premium Member
Joined
·
4,284 Posts
This thread has been done to death but nobody has fully convinced me that renting is the way to go. What part of your sums make renting a more viable option? For mine, the $20,000 instant write off makes owning a more attractive option.
The 20,000 tax deduction is not a gift from the government, It simply means you take an advance on future depreciation and when you sell the car in lets say three years time, the resale value will be added to your taxable income.

So yes, the first year buying will be a more attractive option but not so in the following years. Not to mention whereas you will have a car which gets older, the renter simply upgrades to the latest model.
 

·
Registered
Joined
·
406 Posts
The 20,000 tax deduction is not a gift from the government, It simply means you take an advance on future depreciation and when you sell the car in lets say three years time, the resale value will be added to your taxable income.

So yes, the first year buying will be a more attractive option but not so in the following years. Not to mention whereas you will have a car which gets older, the renter simply upgrades to the latest model.
Exactly, by that time we will all have figured out what we want to do with our lives and move on to other jobs. Pay little tax this year, you have an asset in your name. I don't see why I would claim my trade in in 3 years time as taxable income though. I still don't see the benefits of renting (unless you don't qualify for finance). The weekly cost of rent scares me.
 

·
Premium Member
Joined
·
11,086 Posts
This thread has been done to death but nobody has fully convinced me that renting is the way to go. What part of your sums make renting a more viable option? For mine, the $20,000 instant write off makes owning a more attractive option.
Yes i agree, if you have $20,000 in cash now..
Take advantage of the tax write off til 31st june 2017..
That's what i have done...

After 4 years, the car goes to my daughter who will be old enough to drive.
Thats when i will rent too..thats if im still ubering :)
 

·
Registered
Joined
·
8 Posts
Hi,

Once you take into account Tax deductions and zero responsibility for the car, I'm wondering if you're better off using a rental car for Uber?

Let's say the average rental amount is $250/w (I've seen some as low as $170/w, but there are additional signup fees which negate this "cheap" price), it seems like a large sum of money vs weekly profit. However, considering it includes all maintenance, insurance, roadside, unlimited K's and no depreciation, plus you can deduct the amount from your taxable income, is there much difference?

I really like the idea of a car with no responsibility, has anyone gone down this "route", how does it compare?

Thanks,

E.
Ok, so here's the thing, renting a car at $250 per week is ludicrous as far as I am concerned. You are paying $13,000 a year for a car that you will never have a stake in!

Now lets do the sums on a brand new Kia Cerato Hatch AV - It is driveaway for $21,000 - which works out to be an instant GST Claim of around $2,000 - so what that means is, that new car that you purchased for $21,000 has actually now cost you $19,000. From that, you get to claim the business registration and CTP as on-going business expenses which again works out to be a $1500 deduction, which if you are paying a 30% tax rate works out to be $500 in REAL CASH going back into your pocket!

From the actual asset price of the car - the accelerated depreciation program means that you are then able to deduct the ENTIRE $20,000 cost of the vehicle in one year! Now at 30% tax rate that works out to be $6,000 in real cash going into your pocket and if you are in the top tax bracket that works out to be $9,000 in your pocket!.

Now worse case scenario - You bought a car for $21,000 - you claim back the GST and you are now sitting at a real cost of $19,000 - you then minus the REAL $500 you get back from the rego costs and you are now looking at a car that has actually cost you $18,500 - from that - you now get to deduct a MINIMUM of $6,000 in real cash you get back from the accelerated depreciation program which now means this new car you purchased for $21,000 has a REAL cost to you of ONLY $12,500 which is LESS than what you would pay for a YEAR renting your car!

Now you dig a little deeper and what do you find? Scheduled maintenance costs on the car you own! And people jump up and down about how great it is to have a rental that pays for the scheduled servicing! But lets look at the real costs - for a Kia Cerato over 45,000 kms it works out to be a TOTAL of $840 but seeing that its a business expense - you are now looking at the REAL cost to you for scheduled servicing of $588 after you take your deductions into account!

Again insurance costs which for most people on a Kia Cerato work out to be around $1300 is a deductible business expense and therefore works out to be $910 in real costs to you, which you can pay monthly by the way!

So now we are looking at a car that has cost you in real terms $12,500 - plus your servicing costs of $588 and your insurance of $910. And what do you pay per week for that? Well the MOST you'd pay on a 4 Year term would be $120 a week and when you take out the interest repayment deductions that works out to be a REAL cost to you of $104 a week!

So why would you want to pay over $250 to rent a car when you can own your car for $104 a week while collecting a ton of deductions that give you REAL money back into your pocket? At worst you are talking about $8500 in real CASH going back into your pocket and you pay almost a third less per week than if you rented!

I do not know about you guys but this to me is an absolute no brainer!
 

·
Registered
Joined
·
406 Posts
The 20,000 tax deduction is not a gift from the government, It simply means you take an advance on future depreciation and when you sell the car in lets say three years time, the resale value will be added to your taxable income.

So yes, the first year buying will be a more attractive option but not so in the following years. Not to mention whereas you will have a car which gets older, the renter simply upgrades to the latest model.
Exactly, by that time we will all have figured out what we want to do with our lives and move on to other jobs. Pay little tax this year, you have an asset in your name. I don't see why I would claim my trade in in 3 years time as taxable income though. I still don't see the benefits of renting (unless you don't qualify for finance). The weekly cost of rent scares me.
Ok, so here's the thing, renting a car at $250 per week is ludicrous as far as I am concerned. You are paying $13,000 a year for a car that you will never have a stake in!

Now lets do the sums on a brand new Kia Cerato Hatch AV - It is driveaway for $21,000 - which works out to be an instant GST Claim of around $2,000 - so what that means is, that new car that you purchased for $21,000 has actually now cost you $19,000. From that, you get to claim the business registration and CTP as on-going business expenses which again works out to be a $1500 deduction, which if you are paying a 30% tax rate works out to be $500 in REAL CASH going back into your pocket!

From the actual asset price of the car - the accelerated depreciation program means that you are then able to deduct the ENTIRE $20,000 cost of the vehicle in one year! Now at 30% tax rate that works out to be $6,000 in real cash going into your pocket and if you are in the top tax bracket that works out to be $9,000 in your pocket!.

Now worse case scenario - You bought a car for $21,000 - you claim back the GST and you are now sitting at a real cost of $19,000 - you then minus the REAL $500 you get back from the rego costs and you are now looking at a car that has actually cost you $18,500 - from that - you now get to deduct a MINIMUM of $6,000 in real cash you get back from the accelerated depreciation program which now means this new car you purchased for $21,000 has a REAL cost to you of ONLY $12,500 which is LESS than what you would pay for a YEAR renting your car!

Now you dig a little deeper and what do you find? Scheduled maintenance costs on the car you own! And people jump up and down about how great it is to have a rental that pays for the scheduled servicing! But lets look at the real costs - for a Kia Cerato over 45,000 kms it works out to be a TOTAL of $840 but seeing that its a business expense - you are now looking at the REAL cost to you for scheduled servicing of $588 after you take your deductions into account!

Again insurance costs which for most people on a Kia Cerato work out to be around $1300 is a deductible business expense and therefore works out to be $910 in real costs to you, which you can pay monthly by the way!

So now we are looking at a car that has cost you in real terms $12,500 - plus your servicing costs of $588 and your insurance of $910. And what do you pay per week for that? Well the MOST you'd pay on a 4 Year term would be $120 a week and when you take out the interest repayment deductions that works out to be a REAL cost to you of $104 a week!

So why would you want to pay over $250 to rent a car when you can own your car for $104 a week while collecting a ton of deductions that give you REAL money back into your pocket? At worst you are talking about $8500 in real CASH going back into your pocket and you pay almost a third less per week than if you rented!

I do not know about you guys but this to me is an absolute no brainer!
Ok then. This is detailed. This is what I want to see from the renters. Show me how your figures add up against those in this post.
Neb my only problem with these figures are your service costs. Some drivers could do 45,000kms in 6 months. Still, you end up way ahead. They told me when I was little that rent money was dead money. Still true now and if you do some real sums you might find it's better for you. Be proactive guys, don't give the tax man more than you have to.
 

·
Premium Member
Joined
·
4,284 Posts
Ok, so here's the thing, renting a car at $250 per week is ludicrous as far as I am concerned. You are paying $13,000 a year for a car that you will never have a stake in!

Now lets do the sums on a brand new Kia Cerato Hatch AV - It is driveaway for $21,000 - which works out to be an instant GST Claim of around $2,000 - so what that means is, that new car that you purchased for $21,000 has actually now cost you $19,000. From that, you get to claim the business registration and CTP as on-going business expenses which again works out to be a $1500 deduction, which if you are paying a 30% tax rate works out to be $500 in REAL CASH going back into your pocket!

From the actual asset price of the car - the accelerated depreciation program means that you are then able to deduct the ENTIRE $20,000 cost of the vehicle in one year! Now at 30% tax rate that works out to be $6,000 in real cash going into your pocket and if you are in the top tax bracket that works out to be $9,000 in your pocket!.

Now worse case scenario - You bought a car for $21,000 - you claim back the GST and you are now sitting at a real cost of $19,000 - you then minus the REAL $500 you get back from the rego costs and you are now looking at a car that has actually cost you $18,500 - from that - you now get to deduct a MINIMUM of $6,000 in real cash you get back from the accelerated depreciation program which now means this new car you purchased for $21,000 has a REAL cost to you of ONLY $12,500 which is LESS than what you would pay for a YEAR renting your car!

Now you dig a little deeper and what do you find? Scheduled maintenance costs on the car you own! And people jump up and down about how great it is to have a rental that pays for the scheduled servicing! But lets look at the real costs - for a Kia Cerato over 45,000 kms it works out to be a TOTAL of $840 but seeing that its a business expense - you are now looking at the REAL cost to you for scheduled servicing of $588 after you take your deductions into account!

Again insurance costs which for most people on a Kia Cerato work out to be around $1300 is a deductible business expense and therefore works out to be $910 in real costs to you, which you can pay monthly by the way!

So now we are looking at a car that has cost you in real terms $12,500 - plus your servicing costs of $588 and your insurance of $910. And what do you pay per week for that? Well the MOST you'd pay on a 4 Year term would be $120 a week and when you take out the interest repayment deductions that works out to be a REAL cost to you of $104 a week!

So why would you want to pay over $250 to rent a car when you can own your car for $104 a week while collecting a ton of deductions that give you REAL money back into your pocket? At worst you are talking about $8500 in real CASH going back into your pocket and you pay almost a third less per week than if you rented!

I do not know about you guys but this to me is an absolute no brainer!
I am left scratching my head here.

The rental fee has GST included, deduct $22.73 from $250. The rental is tax deductible, take off 32% or $72.73. That leaves a weekly figure of just $154,54 not $250. This includes all service costs, insurance and rego. Plus no capital outlay and a new car every year. You are right, its a no brainer
 

·
Registered
Joined
·
8 Posts
Exactly, by that time we will all have figured out what we want to do with our lives and move on to other jobs. Pay little tax this year, you have an asset in your name. I don't see why I would claim my trade in in 3 years time as taxable income though. I still don't see the benefits of renting (unless you don't qualify for finance). The weekly cost of rent scares me.

Ok then. This is detailed. This is what I want to see from the renters. Show me how your figures add up against those in this post.
Neb my only problem with these figures are your service costs. Some drivers could do 45,000kms in 6 months. Still, you end up way ahead. They told me when I was little that rent money was dead money. Still true now and if you do some real sums you might find it's better for you. Be proactive guys, don't give the tax man more than you have to.
With the Kia Cerato your total servicing costs are $2208 up to 90,000kms - minus the $200 in GST and the tax savings you are now looking at real cost of $1400 for all your servicing costs up to 90,000kms

I am left scratching my head here.

The rental fee has GST included, deduct $22.73 from $250. The rental is tax deductible, take off 32% or $72.73. That leaves a weekly figure of just $154,54 not $250. This includes all service costs, insurance and rego. Plus no capital outlay and a new car every year. You are right, its a no brainer
Yeah, the weekly rate may be $154 after tax but when you buy the car and finance it you end up paying $104 a week AT WORST and you also get a MINIMUM of $8500 in real cash in your pocket on top from GST and Accelerated depreciation - again no brainer!
 

·
Premium Member
Joined
·
4,284 Posts
Yeah, the weekly rate may be $154 after tax but when you buy the car and finance it you end up paying $104 a week AT WORST and you also get a MINIMUM of $8500 in real cash in your pocket on top from GST and Accelerated depreciation - again no brainer!
$8500 real cash? You have just spend $21000!!!

If it works out for you thats terrific.
 

·
Premium Member
Joined
·
11,086 Posts
Neb

Your calculations is based on 100% business usage.....you need to take out the private percentage to get a correct figure...

I do 93% business and 7% private...but I agree with your premise....whilst the write off is still in effect til 30th June 2017...it's worth taking advantage of it..
 

·
Registered
Joined
·
8 Posts
$8500 real cash? You have just spend $21000!!!

If it works out for you thats terrific.
But you haven't - you are paying $104 a week and you still get to claim that $8500 in real cash. Now you can choose to put every last cent into paying off your loan quicker if you really didn't like the idea of having a loan and basically if you were to put down $250 a week on a loan as opposed to a rental - with the deductions you basically are able to pay off the entire loan in a year - now at this point you sell the car for $7,000 that's real money again in your bank and you get to do the whole thing all over again the next year - except again - you end up with real cash in your pocket because you own the asset.

Neb

Your calculations is based on 100% business usage.....you need to take out the private percentage to get a correct figure...

I do 93% business and 7% private...but I agree with your premise....whilst the write off is still in effect til 30th June 2017...it's worth taking advantage of it..
But if you were renting the car you'd have to do the same sort of calculations as well which is why I didn't work out those numbers because they would cancel each other out.

But you haven't - you are paying $104 a week and you still get to claim that $8500 in real cash. Now you can choose to put every last cent into paying off your loan quicker if you really didn't like the idea of having a loan and basically if you were to put down $250 a week on a loan as opposed to a rental - with the deductions you basically are able to pay off the entire loan in a year - now at this point you sell the car for $7,000 that's real money again in your bank and you get to do the whole thing all over again the next year - except again - you end up with real cash in your pocket because you own the asset.

But if you were renting the car you'd have to do the same sort of calculations as well which is why I didn't work out those numbers because they would cancel each other out.
Mulder99 I will say though, yeah this all works out thanks to the accelerated depreciation calculations - without it - it becomes a harder sell
 
1 - 20 of 42 Posts
Top