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In the bustling corporate world of Melbourne, companies often seek ways to attract and retain top talent, including providing attractive perks to key personnel. One such benefit that may come to mind is the provision of company cars for directors. However, the rules surrounding corporate car ownership can be complex, and companies need to understand the legal and tax implications involved. In this blog, we will explore whether companies can buy cars for directors in Melbourne and shed light on the considerations involved in such arrangements.

1. Legal and Tax Considerations:

The decision for a company to buy a car for a director must comply with all relevant legal and taxation regulations in Melbourne. Such an arrangement may be subject to specific corporate laws and may have implications for fringe benefits tax (FBT) obligations. It is essential for companies to seek professional advice from legal and financial experts to ensure they remain compliant with all regulations.

2. Director’s Role and Need:

Before purchasing a car for a director, companies must consider the purpose and necessity of the vehicle. If the director’s role requires significant travel, having a company car could be a valuable asset. However, providing a car solely for personal use without a clear business need may attract tax implications and require careful consideration.

3. Company Car Policy:

Companies contemplating providing cars for directors should establish a clear and comprehensive company car policy. This policy should outline the eligibility criteria, usage guidelines, maintenance responsibilities, and other relevant terms. A well-defined policy ensures fairness, transparency, and consistency in providing car benefits to directors.

4. Consideration of Alternatives:

While providing a company car may seem attractive, it’s essential to consider other alternatives. Providing a car allowance or reimbursements for business-related vehicle use could be a more tax-efficient option. Directors may also have the option to use their personal vehicles and claim business-related expenses under the logbook method or the cents-per-kilometer method, which could be financially advantageous for both the director and the company.

5. Impact on Employee Morale:

Company-provided cars can be a valuable incentive and a symbol of status for directors. However, it’s essential for companies to consider the potential impact on employee morale. Other employees may perceive it as preferential treatment, leading to resentment and dissatisfaction within the organization.

6. Reporting and Compliance:

Companies providing cars for directors need to ensure accurate reporting and compliance with tax authorities. FBT reporting obligations and declarations should be handled diligently to avoid penalties and legal issues.


While the idea of providing company cars for directors in Melbourne may seem appealing, it is essential for companies to approach this matter with careful consideration and adherence to legal and tax regulations. Before making any decisions, companies must weigh the benefits and drawbacks of such arrangements and consider alternatives that may be more tax-efficient and equitable.

As with any corporate benefit, transparency and fairness are crucial in maintaining a positive work environment. Seeking professional advice, establishing clear policies, and maintaining compliance with all relevant laws will help ensure that the provision of company cars for directors aligns with the company’s values, objectives, and legal obligations.

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Corporate Car Ownership in Melbourne Can Companies Buy Cars for Directors