Capital Purchases and Finance in AccountRight

Hi Ash

Hi Ash

You need to be very clear on the finance you are using. A personal loan or similar does not have GST, a hire purchase arrangement does have GST, which I believe is now claimable at the start of the agreement. With hire purchase the vehicle remains the property of the financier and does not appear on the company accounts until such time that the HP is paid out.

These days HP is rarely used and loan is the most likely arrangement. In this case the car vendors bill is written as

1-xxxx Motor Vehicle at Cost                       $64741                 CAP

1-xxxx Motor Vehicle at Cost                       Remainder          NT

The loan needs to be setup as Credit Card type and is populated by using Pay Bills to pay the bill.

It is unaffected by the GST registration of the company.

I recently answered a similar query and you might find the notes below useful

Changes to Chart of Accounts

1-xx00 (Motor Vehicle) at Cost

1-xx05 depreciation on (motor vehicle)

2- xx00 ABC loan (setup as Credit Card type)

2- xx05 ABC loan interest (setup as Credit Card type)

2 -0007 ABC loan balloon (setup as Credit Card type)

8- xxxx Sale of Asset(MV)

I assume that you already have a Cash drawer and a Directors loan Account

Use Receive Money to Cash Drawer for Sale of old Vehicle 15000 Account 8-xxxx Tax CAP

Setup purchase Invoice for entire cost of Vehicle inc. registration, dealer fees and charges.

Line 1 should read

Vehicle details inc.  Reg #, VIN. Account 1-xx00 MV at Cost            $64741  Tax CAP

Line 2

Vehicle                                                                                                                 Difference  Tax N-T

https://www.ato.gov.au/Business/GST/In-detail/Your-industry/Motor-vehicle-and-transport/GST-and-motor-vehicles/?anchor=Purchasingamotorvehicle#UsedSolelyForBusiness

Generally, if you purchase a car and the price is more than the car limit, the maximum amount of GST credit you can claim is one-eleventh of that limit. For 2022–23, the maximum GST credit you can claim is $5,885 (that is, 1/11 × $64,741). This limit also applies to cars which are fuel efficient.

Pay invoice in three steps

From Directors loan or Bank        $500

From Cash drawer                           $15000

From Loan Account                         Balance

We then need to set up the loan account.

Spend money from Loan Account to Interest on Loan $17K

Assuming that there is no GST on the Loan charges spend money from Loan Account to Bank charges $1301 FRE. If there is identifiable GST charge to Merchant Fees

Calculate the loan amount over $48K and use Spend Money to 2-0007 Balloon.

Monthly payments should be made Bank to Loan and the accountant can do an end of year adjustment to move some of the payment to Interest payable.