Negotiating a discount on the new vehicle rather than a generous trade in value would have a positive impact on your terminal and provisional tax bill.
When a business sells an asset (Fixed Asset) there are a few considerations. If you are GST registered you will have GST to declare on the sale and for Income Tax there is a washup between what you paid for it (Cost), how much you have depreciated it and what you got for it. The cost less the depreciation gives you the book value (BV) and the difference between what you get for it and what the book value is either a loss on disposal which is an additional expense and would reduce your tax bill or a gain on disposal which can be broken into two parts the first being depreciation recovered which doesn’t exceed what depreciation you have claimed in the past and on occasion a capital gain if you get more than what you paid for it, the capital gain would be the amount above what you paid for it. Depreciation recovered increases your profit and tax bill whilst any capital gain is not taxed.
On occasion you may be trading in an existing asset on a new asset which is common with motor vehicles so it is a good idea to have your head around what is the book value of the vehicle I am trading in. You would prefer to get a discount on the New vehicle rather than an overly generous trade in value. eg you are trading in a vehicle that cost you $40,000 and now has a book value of $10,000 anything you get between $10,000 (BV) and the $40,000 (Cost) becomes depreciation recovered and is taxable. The list price on the New vehicle is $50,000 and the dealer offers you $15,000 as a trade in. You would be better off if you negotiated a discount of $5,000 on the new vehicle and accept $10,000 for the trade in, as tax on the $5,000 depreciation that would have been recovered is $1,400 at 28%.
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