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Starting your own race team?

Roy

By Roy,
in General Automotive Discussion

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Roy Grand Master

Roy

Posted
Posted

Nothing too serious, but more a taxation thing. Was speaking to an owner of a track prepped Monaro the other day and he was telling me how he has started his own race team, which is sponsored by the 9 to 5 compnay that he owns. He says the tax write offs make it possible for him to race the Mnaro and do events like the Dutton etc.

So gets me to thinking, is there a smarter way to spend my money on my car? I know of a few forum members already doing this with their weekend cars...but need to know where to go to find out more, and get the ball rolling if my circumstances allow me to do the same.

Tax free tyres, brakes, track entry, mods etc sounds appealing, can it really be as simple as sponsoring your own race team???

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https://www.sau.com.au/forums/topic/73976-starting-your-own-race-team/
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Roy Grand Master

Roy

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This guys car did not have a single sticker...i dont believe it stipulates anywhere what must be offered in return for sponsorship dollars...so doenst need to be decals, it could be argued (if ever questioned) that at Open/Practice days emplyees are taekn for laps/corporate entertainment etc????? LOL...can it????

GTRgeoff Grand Master

GTRgeoff

Posted
Posted

You need an expert in dodgy dealings. Try Mark Skaife. He bought HRT and no-one has seen the cheque stub yet :(

There are definitely advantages, but it's more like a novated lease where the money is paid out of company funds as pre-tax dollars as I understand it, but there is more to it than that . No expert here but I have been poking around at the idea.

JCMarshall_Law Proficient

JCMarshall_Law

Posted
Posted

I've been thinking about getting a team together for a while now, here is a link to the car I'm putting together for motorkana / hillclimbs and the like.

http://www.skylinesaustralia.com/forums/sh...f+my+racing+car

Unfortunatly I don't own a business so it is a bit hard to sponsor myself. Or can I register the team as a business in my name and start claiming tax for the running of the team?

I'd be really interested to know if anyone knows some more info on this topic.

BTW: If anyone is seroius about starting a team and want to become a fiancial member of the project in the above thread them PM me. We could perhaps start a team as joint owners. You would have to live in or around Brisbane.

Abo Bob Grand Master

Abo Bob

Posted
Posted

Ok, let's say I earn $20k pa and my tax is $2k pa. I ask my employer to change this to $10k pa (with $900 pa tax because I'm in a lower bracket now) + $10k pa sponsorship of my race team.

I think that as long as I have an ABN then this is ok for my employer. Having an ABN is no big deal (I've already got one).

My race team obviously needs to have full and proper books so this has to be taken into consideration. I can tell you all from experience that it's a pain in the arse but if it's worth it...

As far as the ATO is concerned I have now earned, from two different sources, $20k pa (just like before) and paid $900 in tax. The costs associated with running my race team however, are deducted from my income.

So, if I spend the whole $10k on running my team, I wont have to pay tax on that money.

End result. I've saved $1100 in tax which is the difference between what I would have paid with a $20k salary and what I have to pay now.

Anyone see any flaws with this?

djr81 Grand Master

djr81

Posted
Posted

Hmmm, might be a bit difficult convincing the govt that it is a legitimate business given its lack of profits any time soon...

Of course if you already have a business or are a contractor it would be much easier to integrate your racing with your current business activities & thence write the whole thing off as advertising for the business.

JCMarshall_Law Proficient

JCMarshall_Law

Posted
Posted

Can't you just register the team as a business (get an ABN) and sponsor it with the money you earn in your day job, then you can take the cost of running the team out of your total income which is your wage + plus income from team (which will presumably be $0 unless you are wining comps). That way you will onely be taxed on your income - the cost of running the team.

I can't see anything wrong with your logic, but it might be eaiser to do what I have suggested.

BTW; I'm no expert on tax law! Maybe some of the accountants on this forum could shed some light on the topic.

RS500 Experienced

RS500

Posted
Posted
Can't you just register the team as a business (get an ABN) and sponsor it with the money you earn in your day job, then you can take the cost of running the team out of your total income which is your wage + plus income from team (which will presumably be $0 unless you are wining comps). That way you will onely be taxed on your income - the cost of running the team.

I can't see anything wrong with your logic, but it might be eaiser to do what I have suggested.

BTW; I'm no expert on tax law! Maybe some of the accountants on this forum could shed some light on the topic.

sounds good, but at the same time, your business is seen as a separate entity, in which u will need to show the ATO that it has an income.

pkblade Experienced

pkblade

Posted
Posted
Unfortunatly I don't own a business so it is a bit hard to sponsor myself. Or can I register the team as a business in my name and start claiming tax for the running of the team?

I'd be really interested to know if anyone knows some more info on this topic.

To benefit for tax minimisation purposes it really depends on choice of business structure for the race team (ie. company = incorporated clubs, org & assoc; partnership etc).

Basically, from an ATO stand point if you register a race team as a business for tax purposes & its out to make a profit & more than just a hobby, then YES you can claim deductions for running the team. There other minor criterias to be met to be considered as a business, but thats the general gist of it.

Your income obviously would be from contracts/ sponsorships (outside sources) etc, (if a club or assoc, I don't think members subscriptions or contributions are seen as income). In turn, for the business sponsoring the race team, they can claim the deduction for sponsorship (coz its a form of advertising).

Abo_Bob: In your scenario (sole proprietor) you can claim deductions against the sponsorship income, however, if the racing team made a loss you can only claim it against your other income, if the race team earned more than $20K otherwise the loss is deferred. Other than that, you were pretty much spot on.

Sorry, if I repeated any things. & yes, I do work in an accounting/ finance firm, but, you should ask current developed race teams & seek more professional advice from a business consultant/ accountant to get a more detailed idea in whats involved. At work the only experience I have had with a race team, is with one client in the US sponsored & rides for KTM.

Disclaimer: I accept no financial liability for the free information provided, relying on this information you do so at your own risk.

Abo Bob Grand Master

Abo Bob

Posted
Posted

Yeah I forgot about the $20k thing. So I guess you have to spend at least $20k pa to make it worthwhile.

I don't think I'm willing to spend that much racing at this point in time and that's not going to change if I get a pay rise.

RS500 Experienced

RS500

Posted
Posted
Yeah I forgot about the $20k thing.  So I guess you have to spend at least $20k pa to make it worthwhile.

I don't think I'm willing to spend that much racing at this point in time and that's not going to change if I get a pay rise.

dude,

you (or the business/race team) need to have an income of atleast $20k to be able to claim expenses/deductions.

pkblade Experienced

pkblade

Posted
Posted
dude, you (or the business/race team) need to have an income of atleast $20k to be able to claim expenses/deductions.

Just to clarify, you can still make under $20K with the race team & still claim expenses. Its only in the event that you make a loss, there's a rule that you can only claim that loss against your other income (eg. wage) provided the race team earned more than $20K (pro rata).

Either way receiving sponsorship is a win situtation for you, Im sure you'll argree its not that hard spending the money in search for our cars to go faster.

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