Why the right answer depends on structure and usage, not a fixed rule
A new vehicle is on the cards.
Should the business buy it, or should you buy it personally and claim business use? The right answer depends more on your structure and usage pattern than most people expect.
The short answer
There's no universal answer — it depends on your business structure, how much the vehicle is used for business versus personal purposes, and how the purchase is financed. As a general pattern, sole traders often have more flexibility either way, while company ownership tends to make more sense when business use is high and consistent.
The core trade-off
| Business ownership | Personal ownership, business-use claim | |
|---|---|---|
| Who owns the asset | The business | You, personally |
| How costs are claimed | Depreciation, running costs and finance costs claimed by the business, apportioned for any private use | Cents per km or logbook method (sole traders/partners); no deduction for a company director's personal vehicle used for the business without a formal arrangement |
| FBT exposure | Can arise if a company car is available for an employee's or director's private use | Not applicable — the vehicle isn't a company asset |
| Best suited to | High, consistent business use, particularly through a company | Mixed personal and business use, particularly for sole traders |
Why company ownership brings FBT into the picture
If a company or trust owns the vehicle and an employee — including a director — can use it for private purposes, this can trigger Fringe Benefits Tax, a separate tax on the value of that private use. This is one of the most common places small company owners are caught out: the vehicle feels like a straightforward business purchase, but private use of a company car has real tax consequences that need factoring in from the start.
Why personal ownership often suits mixed-use sole traders
If you're a sole trader and the vehicle genuinely does both business and personal trips — client visits during the week, family use on weekends — personal ownership with a logbook or cents-per-kilometre claim is often simpler than trying to apportion a company-owned asset for the same mixed use, and avoids the FBT question entirely, since FBT doesn't apply to sole traders.
Questions worth working through before deciding
What's my actual business structure — sole trader, company, trust, partnership?
Roughly what percentage of the vehicle's use will genuinely be business, versus personal?
If the business owns it, who would have access to it for private use, and how often?
How will the purchase be financed, and does that financing structure fit better with business or personal ownership?
Am I planning to keep this vehicle for years, or upgrade regularly?
A simple way to frame the decision
Business ownership tends to make more sense when the vehicle is genuinely a business asset used almost exclusively for business — a tradie's ute, a delivery vehicle. Personal ownership with a business-use claim tends to make more sense when the same vehicle does double duty for both business and family life, particularly for sole traders and partners who have simpler mechanisms to claim that mixed use than a company does.
A quick self-check
Have I estimated my genuine business-use percentage honestly, not optimistically?
Do I understand whether FBT would apply if the business owned this vehicle?
Have I compared the actual tax outcome of both options for my specific numbers, not just the general pattern?
Does my financing option work better with one structure than the other?
When should you get professional help?
you want the actual tax outcome modelled for your specific structure and usage pattern before buying;
you're a company director and want to understand the FBT implications of a company-owned vehicle;
you're financing the purchase and want the structure and ownership decision aligned properly; or
you're not sure whether your business use is high enough to justify company ownership.
Continue learning
→ Can I Claim My Car or Ute Expenses Through My Business?
→ What Is Fringe Benefits Tax — and When Does a Small Business Need to Think About It?
→ Should I Buy, Lease or Finance Business Equipment?
SKC Accounting | Knowledge Centre | Knowledge Guide 055
Last reviewed: August 2026
General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.