biba

I am a company car driver in the UK and have been one for the last 4 yrs as I work as a field engineer.

I would like to know if Australia has the same or similar 'company car culture' to the UK. Here, almost 60% of the new cars on the road are company cars. If I find a job in the similar line of work, am I likely to be offered a company car or am I expected to get my own?

Also, what is the tax situation with company cars? What is finacialy more beneficial - a company car or private? In the UK, for me it's cheaper to have company car than to use my own, due to high insurance cost and general ownership of the vehicle.

Any comments much appreciated!

pockygoes

bump - would like to know the answer to this one

pockygoes

jayr

If you get offered ajob which includes a car package you should either be able to get a motor vehicle allownace, say of $10,000 a year, or you will be able to salary sacrifice a novated lease.

What this means is you go and look for a car (usually no more than 3 years old), you arrange finance normally through an employer approved finance company for x% of the value of the car over y years (which then leaves a fixed residual value). You salary sacrifice the lease payment meaning that the payment comes out of your gross salary rather than your net salary.

This means that (if you are a highest rate taxpayer) that you avoid 48.5% tax on the lease payment. Then, however, you will be taxed FBT, or Fringe Benefits Tax on this benefit. The FBT amount is mileage dependent:

Less than 15,000 kilometres pa 26.85%
15,000 to 24,999 kilometres pa 20.65%
25,000 to 40,000 kilometres pa 11.36%
more than 40,000 kilometres pa 7.23%

Sooo, if you do less than 15k you are basically taxed at 26.85% (rather than the 48.5% you would have paid as income tax).

If you get a car and are allowed to salary sacrifice then you may also be able to salry sacrifice your insurance and rego and maintenance, again saving tax. You may also be able to sacrifice your fuel costs (and effectively pay 45c/litre rather than 90c/litre)

I am fortunate enough to get all of this, but am no expert on how it operates. This is compliicated tax stuff, try www.ato.gov.au for 'correct' information.

Trevglas

Re novated leasing: you have to pay fringe benefit tax on the personal use portion of the vehicle. However, as they say, there are ways and means. The normal method for establishing what is business and what is personal use is to maintain a logbook of the car use over 12 weeks. For this period, just use the car for business travel, and avoid any personal use as far as possible. You may then be able to demonstrate 90-95% business use, which is fringe benefit tax exempt.

An alternative is to get a ute or truck: these are 100% fringe benefit tax exempt!

biba

Thanks a million, guys, exactly what I needed to know. It's all starting to make sense now!

Best regards
B.