Why are cars cheaper with an ABN?

Between towering import costs, dealer markups, and an archaic Luxury Car Tax (one still unmatched by a Luxury Boat Tax, Luxury Helicopter Tax or even Luxury Jewellery/Watch Tax), Australians have long shouldered some of the highest car prices in the world. Not for nothing to global brands laugh into their lobsters while referring to Australia as Treasure Island.

Most of us have no choice but to pucker up and pay the premium, but if you’re one of the millions of business owners trading across the country, your ABN might lend you some extra wiggle room thanks to an ABN discount.

How does an ABN work? ABN stands for Australian Business Number – an 11-digit number assigned by the ATO that acts as a digital identifier with government departments, other businesses and the public. How much for an ABN? They’re free to get, but you’ll only qualify if you’re running a business or some other enterprise (and it doesn’t have to be big, even some starving freelance journalists qualify).

With an ABN, you can claim GST credits, secure a smart looking .au website domain, and open the door to a world of business-related perks. If you’re wondering “Can I buy a car with my ABN?”, the answer is yes – and depending on how much you use the car for business, you may be able to claim fuel, maintenance, depreciation, and other running costs on top of an ABN car discount.

Is it cheaper to buy a car with an ABN?

Sometimes, yes. Sadly, it’s not as simple as walking into a dealership with your ABN and flashing it like a Dan Murphy’s card at Christmas. Instead, the amount you save depends on the manufacturer, your dealership, and the specific model chosen. Additional perks, such as cheaper servicing packages, extended warranties, or lower financing rates, may also be available to ABN holders. However, not all dealerships offer these discounts, and not all vehicles qualify, so it’s worth shopping around and asking directly.

How Does the ABN Discount Work?

The ABN discount is a manufacturer-backed fleet discount that some dealerships offer to business buyers. To qualify, you need a valid ABN, and some brands may require it to be active for a certain period (like six or 12 months). The discount applies at the point of sale, reducing the purchase price before financing or payment, but it isn’t always automatic – you often have to ask for fleet pricing and provide your ABN details.

Since savings vary by manufacturer, model and dealership, some brands have strict fleet policies (offering discounts only to businesses purchasing multiple vehicles). Others also extend fleet pricing to sole traders buying a single car. Even when a dealership participates, the ABN discount might not always be the best deal available.

It's also important to consider that different ABN car lease options affect tax benefits and costs as well. The three main types – Chattel Mortgage, Finance Lease, and Novated Lease – suit different needs depending on whether you're a business owner or an employee.

If your business is registered for GST, you can claim back the 10 per cent GST paid on the purchase price of the car, as well as on running costs like fuel, servicing, insurance, and registration – provided the vehicle is used for business. The amount of GST you can claim depends on the business-use percentage. For example, if the car is used 40 per cent for business and 60 per cent for personal travel, you can claim 40 per cent of the GST paid on its purchase and expenses.

Are there downsides?

Buying a car with an ABN has its perks, but there’s no such thing as a free ride. One of the disadvantages of having an ABN is that it exposes you to Fringe Benefits Tax (FBT). If a business-owned car is available for private use, even if that’s just commuting to work (no, as long as it can take, commuting isn’t considered part of your working day), companies and trusts could be hit with FBT at 47 per cent of the taxable value – which is based on either a flat 20 per cent of the car’s purchase price (Statutory Formula Method) or the actual cost of private use (Operating Cost Method).

For sole traders and partnerships, the ATO treats the car as a personal asset with business use, meaning FBT doesn’t apply, but tax deductions are limited to the business-use portion.

What else should you consider?

Before chasing an ABN discount on cars, check if you’re eligible, and whether the vehicle qualifies. Some dealerships require your ABN to be active for a certain period if you plan on buying a car through a business. Even then, not all brands extend fleet pricing to small businesses.

Timing matters as well. Since ABN discounts are set by the manufacturer (not the dealership), they often apply year-round, whereas EOFY sales are dealer-driven and aimed at clearing stock before June 30. If a brand offers both at the same time, you could double-dip with the standard ABN fleet discount plus an EOFY markdown (although stock may be limited).

Finally, consider how much you’ll really use the car for business, as this impacts your GST claims and tax deductions. If the car is company-owned and used privately, Fringe Benefits Tax could eat into those savings.

Where can you find more information about buying a car with an ABN?

To find the best ABN car deals, start by calling dealerships or checking their websites to see what ABN pricing they offer. Beyond that, the Australian Taxation Office (ATO) website is a great resource for understanding the rules around business vehicle deductions after making an ABN car purchase.