Novated Leasing

[EA-XR6]

Hi,

I just have a general question and hoping someone may help.

I'm at the beginning of researching a Full Maintained Novated Lease through work and I got a few quotes to help me find a good price point.

I've noticed in the quote they have allocated $1100 a year to tyres and I've only request a 24 month period with 10,000k's per year.

Would anybody know if I went ahead with that cost and I got a car that didn't need new tyres when I had it.. I would get that money back?

Same for fuel as well? If they overbudget and I go under do I get it back?
It's also being costed Pre-Tax which would mean I would have to pay tax if I did get it back?

Thanks,

[Ducati888]

Yes, you will get re-imbursed all unused funds at the end of the lease.

[Matty4]

As above, but any unused pre-tax money left over at the end of the lease will be returned to you less the normal taxes payable on that amount.

[Struggo]

Originally Posted by Matty4

As above, but any unused pre-tax money left over at the end of the lease will be returned to you less the normal taxes payable on that amount.

Spot on, but keep in mind that you are taxed at the highest bracket regardless of annual income.

[gtfpv]

Originally Posted by Struggo

Spot on, but keep in mind that you are taxed at the highest bracket regardless of annual income.

damn barstard . i wasnt aware of that , and was using my budget expenditure savings as a form of savings . over 18 months i'm $3000 underbudget . . after 3 years the payoiut figure would be 16g if i get say 4grand of unspent money back , does this come off the 16g if i wish , reducing the payout to 12 k , or do i have to take the cash check and declare it as grose income , and then pay out the 16k . ???

[Teza_XR8ute]

i just sold my hilux - 3 year lease - purchase price of $45k. 15kms a year . this year i missed kms by over 3000kms - FBT smashed me by almost $4k! residual payment was $21k. Sold the hilux for $45k! thank you very much! i had $8.5k in my kitty of un-used funds....i "broke my hard lid and got a new one - canopy) which left me with a touch under $6k... i sold my car first of may and still have not seen this money, but still had to pay the full amount of $21k for payout.... the $6k extra gets refunded at the highest tax point so im expecting about $3k back. Although i hated the lease to do the kms (i also have a work car) not having a lease vehicle now gives me an extra $85 bucks a week! on my wage it was well worth it. Misses CX7 is going on lease next week - Any extra funds will be completely used up from now on, fricken tax man gets you every time!!!!

[dags41v]

I have had a couple of novated leases and yes you get the cash back eventually but you are much better off making a realistic estimate of fuel, tyres etc and reduce your fortnightly payments. I would prefer to have my surplus cash in my offset account or savings account rather than the account of my lease company.

[mr smith]

I used to keep a surplus but now prefer to keep slightly in the negative. Let the lease company hold some of my costs.
That said come the end of this year it will be my last lease, just not worth it with the recent changes.

[Dave3911]

Keeping in mind it's fradulent..... but a way you can avoid paying some tax is just prior to selling the ccar cancel your insurance policy, get a payout from the leftover premium, start and pay for a whole new policy on your account then when the car is sold get the premimum paid out to you again. The fee's charged by the insurance company are negligable in comparision to the tax paid.

Also, if your keeping the car at the conclusion of a lease - with any leftover make sure you buy a set of tyres, 10l of oil, brake pads etc. and keep 'em in the shed for when you need to replace them. Again, technically fradulent in the eyes of the tax office, but means the items come out of pre-tax money.

[GT0132]

Originally Posted by Matty4

As above, but any unused pre-tax money left over at the end of the lease will be returned to you less the normal taxes payable on that amount.

How we operate for ourstaff, if there are any surpluses to be paid we pay it at the "employees" top marginal tax rate as that's what would be deducted if it were paid in cash without novated leasing - so if they earn under 180k then 37% + medicare levy comes off.

If they take top marginal (46%) then it will be adjusted when you lodge your tax return

[kennyboy]

I bought the hard cover for my ute with some of the excess money I paid, also went on some high kilometre holidays, & had some extra services done - auto & aircon. As I paid out the lease & kept the ute it was worth it. The pre tax payments meant I kept taxable income low & didn't pay the extra medicare

[R1XSTA]

Alright, so instead of running a whole new thread. Hopefully i can just find out through this one.

my company have offered me the possibility of a Novated Lease. Now i'm only 20, so not sure on how exactly this lease thing works, Hopefully someone can share some light on this for me.

I earn just shy of $1000 a week before tax, looking at a FG XR6T at the moment, that should cost me about $40,000 brand new.

Is it possible to go second hand cars?
what are the actual costs involved?
what do i loose weekly/annually?
what are the benefits (if any) to Novated Leases?

[gtfpv]

Originally Posted by R1XSTA

Alright, so instead of running a whole new thread. Hopefully i can just find out through this one.

my company have offered me the possibility of a Novated Lease. Now i'm only 20, so not sure on how exactly this lease thing works, Hopefully someone can share some light on this for me.

I earn just shy of $1000 a week before tax, looking at a FG XR6T at the moment, that should cost me about $40,000 brand new.

Is it possible to go second hand cars?
what are the actual costs involved?
what do i loose weekly/annually?
what are the benefits (if any) to Novated Leases?

i cant answer all the questions , just the ones i know .
it is possible to go 2nd hand , bare in mind GST is exempt . so if you buy a 40k car your price will be 36k this is the same if you buy 2nd hand from a dealer , as cars are subject to GST . if you buy private there is no GST savings . ( keep this in mind )
also , if the lease company buys the car for you and supplies it , the interest rate may be a little lower than if you buy yourslef , so if you buy yourself , make sure you can beat the lease companies quote .
you will lose money which will be going towards paying for a car ( people forget they have to pay for the whole car , but what you save leasing , you cant match if you were to buy one privately .
the benifits are many , you dont have to work on the car at all , you can pay $2 p/wk , and insure yourself for car off raod , so if you have a smash , another car is included for you to drive , while the car is off the road , you can insure a gap incase of redundancy
the catch is : if you are sacked , you take the car and pay out the lease outright , which will cost a lot more than 40K , more like 50K in the 1st year .

food for thought , i dont think you earn enough for it to benifit you . but i'm not sure .

just an added bit , 20 year old with FG TURBO !!!! YOUR CRAZY , YOU'LL BE WORKING FOR THE CAR , AND YOU WILL LOSE YOUR LICENCE .
BAD MOVE !!!!

[GT0132]

The benefit of salary packaging arises when you get more net income (after tax income in other words) from having your employer pay the car lease and running costs compared to you paying for them yourself in after tax dollars after taking into account FBT charge the employer will most probably charge back to you.

The benefits are greater the more you earn, so if you're on the top marginal tax rate, you pay 46.5% on anything you earn over $180k a year.

I personally don't think in your situation it would be worth it. I just did some quick sums

Your lease cost would be around $900 a month with a 4 year lease and 40% residual - $8,300 p.a. The running costs, insurance and rego and servicing I estimated at $7,700. The FBT will be a flat 20% of the cars base value ($40,000) and works out to be around $7,000 p.a. Those 3 things sum up to $24,000, and is the amount you will need to sacrifice, before getting into the intracacies of peronal contributions etc - so you lose nearly half your gross income because of a desire to own a XR6T!

By having those things paid out of before tax income you'd certainly pay less tax , but that saving would only be 30% on the first $13,000 and only 15% on the balance, so a total tax saving of $5,500 compared to $12,000 for someone on the top tax rate. The FBT is a flat rate of 45% calculated as 40,000 x 20% 1.98 x 0.45 = $7,128 as I said above

I don't think its worth it

[IDT]

Originally Posted by R1XSTA

Alright, so instead of running a whole new thread. Hopefully i can just find out through this one.

my company have offered me the possibility of a Novated Lease. Now i'm only 20, so not sure on how exactly this lease thing works, Hopefully someone can share some light on this for me.

I earn just shy of $1000 a week before tax, looking at a FG XR6T at the moment, that should cost me about $40,000 brand new.

Is it possible to go second hand cars?
what are the actual costs involved?
what do i loose weekly/annually?
what are the benefits (if any) to Novated Leases?

Probably a bit late with this but with all due respect. Going a novated lease would be dumbest move you could make!
That is even if they let you as a T6 would probably attract higher repayments on any finance attached to the lease still needs you to demostrate a)you can afford it and b)the risk to them is minimal. If your employer and the lease company let you by a T6 they also need shooting.From experience with friends and family if you cant make money with the vehicle. i.e. ute or wagon used for work don't bother. Finally one thing many people forget is if you lost your job you are still stuck with the car, the employer bears no responsibility at all. If you go to a new employer they do not have to accept the Novated lease as part of your employment contract. Repayment terms are genereally high in these situations compared to a normal car loan. If you get into difficulty you either have to unload the car at a huge loss or take on the payments out of your net income.