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Geektastic

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#290067 19-Oct-2021 11:14
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I have noticed that car dealers often want to contract out of the CGA when selling a vehicle to a business.

 

 

 

My research suggests that they can actually only do so and expect it to stick if the goods supplied are not such as would not normally be supplied for personal use (for example dental equipment). Cars etc are commonly supplied for personal use so clearly they would (it seems) not in fact be excluded.

 

 

 

The question arises in my mind as to whether it matters if you sign the clause in the sale agreement that says the CGA does not apply or not. I read that the the CGA trumps the written agreement in the event of a dispute - or at least has the capability to do so if the deciding authority wishes it.

 

 

 

How do others who buy work vehicles for their companies handle this? Clearly new vehicles have manufacturer warranty which covers the first two or three years etc but what about later?






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SirHumphreyAppleby
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  #2797545 19-Oct-2021 11:31
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My interpretation when I last looked into this was that it came down to how an item is being used, not the entity that purchased it. Domestic versus commercial use is very different and IMO it's reasonable to contract out of the CGA if the item is being used in a commercial environment, regardless of the product type. A microwave in an office kitchen is likely to be used more than one at home for example, even though it is a domestic product, so why should it be expected to last anywhere near as long?

 

EDIT: A better example.. If your company owns rental properties and buys domestic appliances for use on those properties, and doesn't contract out of the CGA, then they are covered.


Obraik
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  #2797557 19-Oct-2021 11:49
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When buying for business/commercial purposes, yes, they can have you waive the CGA, acknowledging that it's not going to be used for personal use.


Geektastic

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  #2797563 19-Oct-2021 12:02
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Is domestic use of a car "very" different from work use of the same car to go to meetings etc?







ghettomaster
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  #2797606 19-Oct-2021 14:03
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Geektastic: Is domestic use of a car "very" different from work use of the same car to go to meetings etc?


Potentially. Like the microwave example above, some company cars do considerably more kilometres than a typical private car.

zenourn
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  #2797622 19-Oct-2021 14:26
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Here is an interesting case of this:

 

https://www.nzherald.co.nz/business/couple-wins-28k-electric-car-payout-after-motorway-scare/EEKHAINQUQAZI6D6P66PIZXLGY/

 

In summary, although the couple had purchased the car through their business and even waived their rights to be covered by the Act, "tribunal adjudicator Jason McHerron ruled that in this case, the vehicle had been bought for both personal and business use so "despite purchasing the vehicle for its business ... the Act, therefore, applies to this dispute." "

 

Once I was going to buy a new car through my company for mainly personal use and they were OK with not contracting out of the CGA. However, they also wanted to contract out of not guaranteeing spare parts and repair facilities, which they wouldn't budge on so never went through the purchase.


RUKI
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  #2797752 19-Oct-2021 17:57
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Solution is as simple as 1-2-3:
1. Buy brand new car with 5 year warranty (e.g. Toyota provides that if you service at a $250 cap with them annually);
2. Apply SL depreciation, so that in 5 years it is 100% depreciated
3. Buy next brand new car.
Nothing to worry about.....




Toyota / Lexus Hybrid and EV Battery Expert Battery Test & Repair 

 

 


MadEngineer
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  #2797754 19-Oct-2021 18:01
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As above. Any faults with the car ultimately become the problem of whoever sold it to you as it’s going to be their trade in.




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Geektastic

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  #2797847 19-Oct-2021 20:58
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The vehicle that gave me cause to ask the question has a 2 year manufacturer's warranty, unlimited mileage.

Nobody else makes one so there's no alternative to choose.





afe66
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  #2798076 20-Oct-2021 10:59
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Surely for me, if your going to claim the gst or depreciate it then its a business expense.

And you'll be paying fridge benefit tax on it too if there's a personal use component.

sleemanj
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  #2798197 20-Oct-2021 14:55
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afe66:  paying fridge benefit tax

 

 

 

Damn government, taxing us just for keeping our boneappletea cold!

 

 





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James Sleeman
I sell lots of stuff for electronic enthusiasts...


Geektastic

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  #2798231 20-Oct-2021 16:01
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afe66: Surely for me, if your going to claim the gst or depreciate it then its a business expense.

And you'll be paying fridge benefit tax on it too if there's a personal use component.

 

 

 

Yes you will but FBT is usually way lower than the actual running cost if you keep it privately!

 

 

 

The concern in this instance is solely the potential to rely on the CGA at some future point given the relatively short manufacturer warranty.

 

 

 

A friend suggested buying it new from the dealer then simply transferring it into the business with a paper transaction or alternatively buying it back from the business in the event that you needed to claim CGA but that all seems a bit complicated!






Obraik
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  #2798233 20-Oct-2021 16:04
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I don't know if transferring it would help you with the CGA as it doesn't apply to private sales. For the CGA to apply, your business would need to be in the business of selling second hand cars.


Senecio
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  #2798258 20-Oct-2021 17:15
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As its a business, would leasing a vehicle be a better solution than buying outright?

 

 


Batman
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  #2798323 20-Oct-2021 19:58
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RUKI: Solution is as simple as 1-2-3:
1. Buy brand new car with 5 year warranty (e.g. Toyota provides that if you service at a $250 cap with them annually);
2. Apply SL depreciation, so that in 5 years it is 100% depreciated
3. Buy next brand new car.
Nothing to worry about.....


Umm when it gets fully depreciated can you then sell it to your wife? Serious question...




Involuntary autocorrect in operation on mobile device. Apologies in advance.


Geektastic

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  #2798361 20-Oct-2021 22:45
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Batman:
RUKI: Solution is as simple as 1-2-3:
1. Buy brand new car with 5 year warranty (e.g. Toyota provides that if you service at a $250 cap with them annually);
2. Apply SL depreciation, so that in 5 years it is 100% depreciated
3. Buy next brand new car.
Nothing to worry about.....


Umm when it gets fully depreciated can you then sell it to your wife? Serious question...

 

 

 

Yes of course you can. You need to show that it was sold at market value - on paper anyway - so you just find a few examples on Trade Me that suit your purpose and file them in case of audit.






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