How to Sell a Company Car: Important Things to Know
Selling a company car is a necessary part of a business’ life cycle. Whether your organisation needs to update its fleet of company vehicles, or an employee who previously retained the car is now leaving, there are several things that could prompt a business to look at moving their cars on.
The process of selling a company car can raise a number of questions. Can I sell a company car to myself? What is the process for selling a company car to an employee? What are the tax implications? This AutoFlip guide will help you understand the legal requirements and processes involved in selling company vehicles, ensuring your business remains legally compliant throughout the transaction.
Selling a Company Car: Legal Considerations
One of the biggest questions people have when selling a company car is whether it is legal, and what considerations they must make before proceeding with the sale. While it is completely legal to sell a company car, there are a few factors you should consider as part of the process.
Vehicle Ownership
Businesses choose to purchase their vehicles in a number of different ways. Some choose to buy the vehicle outright and register it under the company name, while others may take out a novated lease or another type of financing agreement against the car. If the vehicle is financed, the business may need to pay the loan out before proceeding with the sale.
Regardless of how the vehicle was purchased, it is important to confirm that the vehicle is owned by the business, and that approvals have been granted by company authorities before it is sold.
Documentation
Many of the documents used in the sale of a company car are identical to those used in a private vehicle sale, including the registration certificate. If you are buying a vehicle that was previously owned by a company, check that the name of the organisation matches what is listed on the registration certificate. If it does not, ask if the company usually trades under another name.
When selling a company vehicle, ensure to include the registration certificate, vehicle service history and proof of identification and employment to ensure buyer satisfaction. Both you and the buyer will be responsible for completing the necessary vehicle sale paperwork, which varies by state or territory.
State or Territory Regulations
Each state and territory in Australia has a specific set of regulations which covers the sale of vehicles registered to both privateers and businesses. It is recommended to consult with the relevant transport authority before selling a company-registered vehicle, to ensure the process is carried out legally.
Tax Implications of Selling a Company Car
When selling a vehicle registered to a business, there are a number of financial obligations that should be considered. Please note that the following items are intended as a guide only, and that you should consult with a financial authority for any formal tax advice.
Goods and Services Tax (GST)
When selling a company car, businesses who are registered for GST must account for the GST amount as part of the sale. This rule applies regardless of whether GST was claimed when the vehicle was purchased. The GST amount is often calculated based on how often the vehicle is used for business purposes. For example, if the car is used for company purposes 80 percent of the time, 80 percent of the selling price is subject to GST.
Fringe Benefits Tax (FBT)
FBT may apply when selling a company car to an employee at less than its market value. The amount which FBT is payable on is usually the difference between the selling price and the market value of the car.
How to Sell a Company Car Step-by Step
Below, we’ve compiled a complete guide on how to sell a company car.
Gather all relevant documents
Once your business has decided to move on an existing company vehicle, you first need to gather all information relevant to the car. This will include its registration certificate, sales receipt and service records. If applicable, you will also need the vehicle’s finance or leasing documents and any logbooks that record a split between private and business use.
Determine the car’s market value
Use an online valuation tool or have an appraisal conducted in-person to find out the true market value of the vehicle. You may also compare similar private listings and any trade-in offers you receive.
Consider any tax implications
Remember that you may need to charge and remit GST on the sale of your company registered vehicle, if your organisation is GST-registered. If you are selling a company car to an employee or director, you may also incur Fringe Benefits Tax (FBT) on any amount below market value that the vehicle transacts for.
Assess your selling options
There are a number of ways of selling a company vehicle. Trading into a dealership is a fast option, while auctions are useful for wide-ranging fleet sales. Private sales, meanwhile, may be restricted to selling the vehicle to an employee, a director or yourself. If you are looking for a fast and easy way to sell a company car, AutoFlip’s sales platform is for you. We have a vast range of experience selling company vehicles for competitive prices in just a few days. Apply for an instant offer or sell your car for cash today.
Can I Sell a Company Car to Myself?
You can sell a company car to yourself, however the transaction may be subject to the same FBT clauses as selling to an employee. In addition, you may need to determine a fair market value for the car and account for the GST on the sale, depending on the type of sale and your business’ tax registration status.
Sell Your Company Car Hassle-Free With AutoFlip
Selling a company car involves a number of legal and financial considerations, whether it is to a licensed motor dealer, a private buyer or an employee of your organisation. Ensure you adhere to these frameworks and consult a financial professional or your local roads and traffic authority if you are unsure.
If you need to sell your car easily and for a great price, AutoFlip can help. Our sales platform is a hassle-free car sales option that ensures you receive the best price possible in a short timeframe. Contact us with your vehicle’s details today and we’ll list your company car for free!
