Thread: novated lease advice

I have the option of a novated lease vehicle over the company supplied one, but I personally go the company vehicle every time, even with the companys logo all over it. The only reason, is that I'm too lazy to do the paperwork required. The company car comes with a fuel card, e-tag and all servicing, but if I had a novated lease vehicle, I would need to keep a log book for every trip, set up a credit card to pay for everything, and claim this back from the lease company each month. Too much for me, I just jump in mine and drive it anywhere, anytime and everything is already sorted. The most effort I go to is to ring up to book it in for a service...

Just my view, others may have more positive experiences...

Cheers - Gav

My Disco is novated but our company runs the process like a company car re expenses etc.

Much of the benefit (in my opinion) from novated lease sits with the company because it is not an asset/liability on their books because you own it and they just pay for it. If you leave or they sack you, the car and all it's lease payment etc etc go with you and they don't have a car sitting out the back that they are paying for.

The benefit for me with a Novated lease is that at the end of the term, i pay the residual (balloon payment) and it is mine to do with what i want and i go back and buy another car via the novated lease. Some of our staff trade the car in order to upgrade beyond the price we set for the position. However, not sure that all companies run it that way (ours is very good to staff hence why none of ever leave) so i would be finding out more about the 'model' your employer proposes to implement.

My novated lease works pretty much like Gav explains above so appears to be similar to the work car without the logos. Fuel card, servicing, insurance etc all included in the package.

Doing over 40,000 km per year used to be a big tax saving but the Feds just got rid of that in the budget I believe so the bigger annual mileage is not such a saving now.

It works out well for me with my D3 on novated lease and SWMBOs commondore on an associated lease.

Keep in mind that the budget announcement included provisions to cut back on the benefits of novated leases.

You've got to be very careful with the amount of k's you travel on a novated lease.

The leasing company sets a certain amount of k's per yer depending on the amount you want to pay. If you're under the k's when the lease is up - trouble. If you're over the k's - trouble.

My work offers me an option of a novated lease or a car allowance. After doing some comparisons in costs, the car allowance won out every time.

You might want to check with the leasing company what your monthly costs will be with the amount of k's you're planning on travelling. I expect that they will charge you significantly to cover for all of the extra fuel, servicing, tyres e.t.c.

You might get a bit of a shock!

Yes, getting a novated lease allows you to get whatever car you want, but if it was me and travelling that amount of k's per year for work.... I'd be taking the company provided falcon or commodore or whatever it is that they are giving you. It's free!

It is all changed as of the last budget. No longer a sliding scale based on km's. Now it is 20% FBT FLAT RATE regardless of the mileage. Which to my way of thinking makes it less attractive but not unworkable.

The 20% per year of the cost of the vehicle (not including GST). Sounds like a lot, but remember these are pre tax dollars. Also your running costs...rego, ins, fuel, tyres, repairs are also paid from your pre tax income although most companies now are packaging these costs (ie: You pay interest on the money set aside for running the vehicle)

You got to do your sums (or pay someone to do your sums), depends on your tax rate etc etc. as to whether it is worthwhile.

Further reading on the changes here --> http://www.fleetcare.com.au/go/blog/...es-budget-2011

if you do the kms it may work for you, just make sure you don't get into the trap ogf forced driving holidays just before the end of the financial year to make up the kms.

After much research I have found the best way is to purchase the car yourself via HP or personal loan & pay for all maintenance etc.

You then claim all the expenses at the end of the year & there is no FBT.

You get your work to allocate a portion of your salary as a car allowance.

The downside is you will have to run a log book for 3 months & be good at keeping receipts etc.

My car is claimable from home to home as I have to carry my tools of trade which are laptop, PPE, documents etc & I do not go to the office everyday.

I run a D3 via this method.

I have been audited once and was OK.

I also claim an income tax withholding variation which then gives me my car allowance tax free which I then have to provide receipts for at the end of the year.

Everything is claimable in accordance with the work v private use percentage established in your logbook.

If you buy a new Freelander via Landrovers corporate program scheduled service will be free except for wear & tear items such as brakes & tyres.

A good accountant is worth the fee.

Hope this helps.

Regards

Chuck