OT - Car or cash in a package?

**George130** · 6th July 2006, 08:03 PM

With the novated lease it workes best if you do the distance. My beastie is on a 5 year lease with a payout of $9000 at the end. All running cost come from the lease so are pre tax dollars and GST free. I do pay 7% of the vehicle lease in pre tax dollars so it doesn't show up on my tax. Its good for me due to the 45,000km I do each year. The lower the distance the less its worth unless you are in a high tax bracket. The best advice I can give is do your sums first and if its cheaper then

othewise you will feel it

.
For your tax info use the ATO website.

**LRHybrid100** · 6th July 2006, 08:31 PM

you called???

Novation is GREAT for older less expensive vehicles with high "maintenance" costs!!!

Take for example a P38a - NICE vehicle and get alot for your money and then the fuel / insurance / maintenance costs are all less GST and reduced by your marginal rate of tax!!! So even running a P38a would be reasonable.

The only issue with Novated Leasing is the FBT - so you need to make sure you do 15000+ kms per year to make it effective in most cases.

HTH

LRH

**LRHybrid100** · 6th July 2006, 08:35 PM

Originally Posted by EchiDna

do we have any tax experts on here? I would have thought landy ownership meant lotsa potential for tax writeoffs on *cough* necessary accesories like GPS *cough*

As for GPS - get yourself a PDA based one, NAVMAN etc and salary sacrifice it AND then you can also write it off in your annual tax return - double bite eh?

Laptops and PDAs were exempt for FBT the last time I looked.

LRH

**crump** · 7th July 2006, 05:07 AM

Can you do the same deal on a set of lockers? My group certificates on its way.

**CraigE** · 7th July 2006, 07:07 AM

Most lease companies will not do a novated lease on a car older than 6 years.

**dobbo** · 7th July 2006, 07:36 AM

The last of the p38's be 4 years old would they so a novated lease could be an option if they go up to a 6 year old car

**LRHybrid100** · 7th July 2006, 07:58 AM

some do 10 year old cars at the start of the lease!!!

most its down to the value of the vehicle - min $10,000

LRH

**LRHybrid100** · 7th July 2006, 07:59 AM

Originally Posted by crump

Can you do the same deal on a set of lockers? My group certificates on its way.

arent lockers part of "maintenance"?

**waynep** · 7th July 2006, 08:15 AM

On Novated Lease this is what I found there will be other opinions :

1. You need to do at least 25,000km a year in the car to make worthwhile. That's because the more of k's you do per year the higher your tax break ( which really stikes me as ironic - you'd think they would be rewarding us for doing LESS k's in the new "energy saving" world.

2. It can cost you heaps if you find you don't like the car - getting out of a lease early can be very expensive.

3. You need to maintain the resale value as it is your job to sell it for as much as you can at at the end of the lease.

4. You can normally only buy a "newish" vehicle eg one that is less than six years old at END of the lease

But the advantages ar many too eg all your petrol and maintenance can be paid pre-tax under the arrangement and it is free of GST too.

Really you need to sit down and do the sums with someone who knows how to work it all out.

**Tusker** · 7th July 2006, 11:47 AM

Going the FBT route is usually worthwhile if you're in the top tax bracket. Gotta do the numbers every time though. Its rarely worthwhile if not - FBT has a flat rate = to the top marginal rate, was 48.5%, now 45.5% I think. Need to check that.

And the top bracket threshold has been lifted considerably.

Check if your employer will allow either FBT method. A lot just take the easy way out & just use the statutory formula method. Sometimes the log book method is cheaper.

You'll probably be paying the FBT, effectively. Again most employers cost the salary sacrifice so thats its neutral to them - FBT will come out of your package. Which is a bugger if you can't choose the cheaper method.

A novated package is essentially identical, the tax/FBT treatment is the same. Only difference is that if you leave, the car repayments instantly becomes your problem.

Regards
Max P

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