jskogsta

I'm wondering if novated lease/salary packaging is a good thing to do. We need two cars and I could do one under such a lease as a salary package, but I am not sure about the real benefits of it. I know this goes through the pre-tax money .. and could potentially save you some thousands. Which is a good thing.

Is this scheme possible for used cars as well? Anyone know??

Thanks in advance!



/Jørgen Skogstad

MrsDagboy

You should be able to do a novated lease on new or used cars, I dont think it matters. There was a thread a while back about car packages, its here . Salary packaging & novated leases are definitely an advantage to the employee as are salary sacrificing.

Dagboy has a salary package & novated lease with his company, check out the terms set by your employer in regards to both the lease & the salary package. Dagboys includes things such as the car lease, health insurance, car park etc.

brisnick

and don't forget that fringe benefits tax will hit badly if you drive under 15,000km a year, and still hit a bit if you drive under 25,000km a year.

i figured out for me it was cheaper to buy.

jayr

That depends on your marginal tax rate. Thes figures may be a bit ouf date but if you do less than 15000Km the FBT rates is 26.85%, if 15000- 25000km the FBT is 20.65%.

If you pay tax at 48.5%, and say the car lease is $500/month then you save about 22% x $500 even if doing under 15000km relative to not salary sacrificing.

With my employer I can also salry sacrifice petrol, maintenance and insurance. At least some of these (certainly petrol) don't attract FBT so you can be basically getting petrol at half price.

MrsDagboy

Ours is similar, if you look at that other thread our running costs all come out of an accrual account which is all pretax.

Nick, I imagine part of your problem with lack of kms is the fact that you live so close to the city. I know that when we lived at Logan (25-30kms from the CBD), Dagboy had no problem at all racking up the kms, but that got harder when we moved to the Manly West area (about 15kms from the CBD). Now that we are only 8ms from the city, it will be harder still, luckily our lease is up next month, so we will be keeping the car & doing a deal with the company & cashing in the accrual account.

jayr

I think mine is kind of similar to an accrual account. At the start of the year I nominate how much I expect to spend on petrol and maintenance and how many kms I expect to do. I always overstate the costs and understate the kms as at the end of the year there is a reconcilliation and I usually end up in the next km bracket and get essentially a refund on the difference between actual and assumed FBT rate as well as any unusd petrol/maintenance.

Also worth noting that my scheme is based on private not business use. I take public transport to/from work - my wife uses the car.

MrsDagboy

Interesting. Ours is just a lump sum ($1000 from memory) that is added onto the salary each month then taken off again (yeah makes sense - NOT! LOL) for tax purposes. Dagboy only reconciles at the end of the year. He has a fuel card which gets paid from the accrual account, & anything that he pays for (like servicing, rego etc) he simply claims back as an expense which then comes out of that account. AFAIK, the extra just keeps on accruing (hence the name I guess ) & at the end of the lease he gets the balance in the account (not sure how that works tax wise). With regards to the usage, ours is both business & private ie we always use his car when we drive around Brisbane or if we go away anywhere etc.

RichS

this mob are pretty big in the field of salary packaging and novated car leases. They have some example formula pages where you can plug in your requirements..www.novalease.com.au

also, when buying IT stuff remember that laptops etc are packageable, but desktops aren't, though you can get tax allowance on your desktop if you use it for work.

MrsDagboy

That's who ours is through.