Moving your work vehicle from sole trader to company: what happens to the finance?

If your work vehicle is still financed in your sole trader name and you’ve just set up a Pty Ltd, you can’t simply hand the keys to the company. The loan is your personal contract and the lender holds security over the vehicle, so it has to agree first — usually through a payout of the old loan and fresh finance in the company’s name. Then come duty, GST and tax.

That’s the short version. The longer version matters, because the order you do things in decides whether the move is a tidy afternoon of paperwork or a mess of double duty, a surprise tax bill and a lender asking why its security has changed owners.

Why can’t I just change the name on the rego?

Because the registration and the finance are two separate things, and only one of them is yours to change.

When you financed the ute or van as a sole trader, three things were set up:

1. A finance contract between the lender and you personally, trading under your ABN.
2. A security interest registered on the Personal Property Securities Register (PPSR) against the vehicle’s VIN.
3. Ownership — which sits with you on a chattel mortgage, or with the financier on a commercial hire purchase until the last payment.

Your company is a separate legal person. Moving the vehicle to it is a sale, even if you own every share. Most vehicle finance contracts say you can’t sell, transfer or otherwise dispose of the security without the lender’s written consent. Re-registering it into the company without that consent can put you in breach, and the PPSR registration follows the vehicle anyway — so the company would be holding an asset that’s still security for your personal debt.

What are my options for the finance?

There are three realistic paths. Which one suits depends on how much is owing, what structure you’re on and how long the company has been trading.

Option	How it works	Best when
Pay out and refinance in the company’s name	The company buys the vehicle from you with a new chattel mortgage; the proceeds pay out your sole trader loan at settlement	The balance is meaningful and the company has bank statements to show
Ask the lender to move the contract	The lender assesses the company and re-documents the loan, usually with directors’ guarantees	Your current lender is open to it and the terms are worth keeping
Leave it with you until it’s paid off	You keep the loan and ownership; the company uses the vehicle under a documented arrangement	Only a few repayments are left, or the balloon is close

Paying out and refinancing

This is the most common route, and the cleanest. The steps run like this:

1. Ask your current lender for an itemised payout figure, including any early termination fees and the balloon if there is one.
2. Get the vehicle’s market value — a dealer appraisal or a printed valuation guide is enough for most lenders and accountants.
3. The company applies for a chattel mortgage to buy the vehicle from you. The lender treats it like a private sale between related parties and will want to see the payout letter.
4. At settlement, the new lender pays your old lender directly, the old PPSR registration is discharged, and the new lender registers its own interest against the company’s ownership.
5. Only then do you transfer the registration into the company’s name.

If the vehicle is worth more than you owe, the company may be able to borrow up to its value and the difference comes to you as the seller. Whether that’s sensible is a question for your accountant — it changes how much the company owes you, and how that money is treated.

It’s very similar to a refinance, and it’s a good moment to fix anything you didn’t like about the original loan, such as an oversized balloon.

On a hire purchase or lease

On a hire purchase, the financier owns the vehicle until the final payment. You have nothing to sell the company until the agreement is paid out, so the refinance route is effectively the only one. Finance leases work the same way: the lease is terminated, and the company either buys the vehicle at the payout figure or takes out its own facility.

If you’re not sure which structure you’re on, check your contract or the lender’s annual statement. It changes the paperwork more than anything else on this list.

Ready to look at company finance for a vehicle you already drive? Start a 60-second enquiry and tell us what’s owing and who the lender is.

Will a lender finance a brand-new company?

Usually, yes — if the trading history comes with it. A company with a fresh ACN that took over a sole trader business doing the same work isn’t really a start-up. Lenders who understand restructures look at:

• how long you’ve traded in the same line of work, under either structure;
• recent bank statements for the sole trader account and, once it’s running, the company account;
• your latest tax returns or BAS showing the sole trader income;
• the company’s ASIC extract, and your ABN history.

Expect to sign a director’s guarantee. That’s standard for small companies and isn’t a sign anything is wrong. Our page on vehicle finance for new ABNs covers what lenders want when the history is short.

Do I pay stamp duty moving the vehicle into my company?

Often you do, and this is the cost most owners don’t budget for. Revenue NSW says plainly that you will need to pay duty when transferring a vehicle “to or from a company name”, and uses an individual moving a vehicle into their own Pty Ltd as its example (Revenue NSW — motor vehicle duty exemptions).

Other states and territories set their own rules, and some have concessions for small business restructures that may or may not extend to vehicle registration duty. Don’t assume — check with your revenue office or transport authority before lodging the transfer, and get the answer in writing if a concession is on the table. Our stamp duty and registration guide links to each state’s official calculator.

Two practical points:

• Revenue offices generally look at the vehicle’s market value, not just the figure on your invoice, so a token sale price to your own company isn’t a reliable way to reduce duty.
• Ask whether the new lender can include the duty in the company’s finance. Some will; some won’t on a related-party sale.

What about GST?

If you’re registered for GST as a sole trader, selling the vehicle to your company is generally a taxable sale. You account for GST on the price, and the company — if it’s registered — claims a credit, capped at the car limit for passenger cars. For a vehicle between two registered entities owned by the same person, the net effect is often neutral, but the paperwork still has to exist: a proper tax invoice from you to the company.

If your whole business is moving into the company at once, your accountant may look at whether the sale qualifies as a GST-free supply of a going concern instead. That has strict conditions, including a written agreement made before or at the time of the transfer. For more on credits and the car limit, see GST on business vehicles.

Is there income tax on the transfer?

Normally, selling a depreciating asset triggers a balancing adjustment — the difference between what you sell it for and its written-down value. For a vehicle that was written off quickly, that can mean a lump of assessable income in your final sole trader year.

The ATO’s small business restructure roll-over is designed for exactly this situation. It lets a small business move active assets, including depreciating assets, to another entity without an income tax liability. The ATO lists the key conditions as an aggregated turnover under $10 million, a genuine restructure of an ongoing business, and no change to the ultimate economic ownership of the assets (ATO — small business restructure roll-over).

If the vehicle sits in a small business depreciation pool, there’s a related rollover under the simplified depreciation rules. The ATO says both you and the company must choose it in writing and keep that record for five years, and the choice has a deadline tied to the end of the company’s income year (ATO — rollover and restructure). Get your accountant involved before settlement, not at tax time.

The bit nobody mentions: FBT

As a sole trader, private use of the work ute just reduced your deductions. Once the company owns it, you’re a director or employee using a company vehicle — and private use can become a fringe benefit the company reports and pays tax on.

The ATO explains that limited private use of an eligible vehicle, such as a ute or van, can be exempt — think driving home and minor, infrequent private trips (ATO — FBT on cars and other vehicles). A dual-cab used for weekend camping, or a sedan, is a different story. Read our FBT on business vehicles explainer before the transfer, because it can change which vehicle belongs in the company at all.

An illustrative example: an electrician incorporates

Illustrative only — not a real client, and the figures are round for clarity.

A Newcastle electrician has traded as a sole trader for six years and sets up a Pty Ltd on 1 October. The work ute has a chattel mortgage in their personal name with about $28k owing, and a dealer appraisal values it at around $41k. They also have a personal-use SUV financed separately.

Here’s the sequence their accountant and broker agree on:

1. The accountant confirms the small business restructure roll-over applies and drafts the written choices for the depreciation pool.
2. The company applies for a chattel mortgage to buy the ute at market value, using the sole trader’s bank statements and tax returns plus a director’s guarantee.
3. At settlement the new lender pays the old lender the $28k payout; the balance is recorded as a loan from the electrician to the company.
4. The company receives a tax invoice from the electrician as a GST-registered seller and claims the matching credit.
5. The ute is transferred into the company’s name and NSW duty is paid on the transfer.
6. The SUV stays in the electrician’s own name. Putting it in the company would bring FBT into play for very little benefit.

Total time from first call to new rego papers: a little over two weeks, most of it waiting on the accountant’s sign-off.

A checklist before you move anything

• Find out whether you’re on a chattel mortgage, hire purchase or lease.
• Get an itemised payout figure from your current lender.
• Get a market valuation of the vehicle.
• Ask your accountant about the restructure roll-over and GST treatment — before settlement.
• Check your state’s duty position on a transfer into a company name.
• Decide which vehicles belong in the company, with FBT in mind.
• Line up company finance, then transfer the registration and insurance last.

The business vehicle finance planner is a quick way to sanity-check which structure suits the company going forward.

Let’s get the vehicle into the right name

Changing from sole trader to company is a sign the business is growing — and it’s the right moment to get your vehicles sitting in the right entity, on finance that suits the company rather than the person you were when you first signed.

That’s work we do every week. Telling us about your vehicle and your new company takes about 60 seconds, and there’s no credit check when you first enquire. We don’t send your details to a pile of lenders, so you won’t be fielding calls from people you’ve never heard of. A real person who understands restructures reads what you’ve sent, looks at what’s owing and how long you’ve been trading, and calls you to talk it through.

Please fill the form in accurately — the current lender, the rough payout figure and when the company started — so we can line up the right option first time.

See if your company qualifies →