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The Pub For General Automotive Related Talk |
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#1 | ||
GT
Join Date: Apr 2005
Location: SYDNEY
Posts: 9,205
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the budget has changed the novated lease arrangements, on all new novated lease car contracts effective immediately after the may 10 federal budget .
this allows a flat 20% FBT regardless of distance travelled . however the golden rule for TAX EFFECTIVENESS worthwile of novated leases up to this date was ," it's not worth doing unless you travel atleast 25000km/pa" , which will give you AN FBT OF 11%/pa . this is the reason most people who have ever utilised novated leasing do high kms in travel . most people i think dont bother leasing , if they do under 25000km because the current 20% tax rate applies which makes any benifits minimal. DO YOU THINK THE GOVT HAS KILLED OFF FRINGE BENIFIT INCENTIVES which will destroy novated leasing ? or do you think people will still take up leases anyway , because there is still a small benifit , which will apply to a wider range of paeople ? the only ones that are better off are the people who will take up a novated lease , who travel less than 15000km/pa . in this case the FBT, tax rate will reduce from 26% pa to 20%pa . but like i said . the only ones i think that were accessing novated leasing were people doing over 25000km @11% or 40000km @7% . here is the link that explains the changes . what do you think . ???? i think they have ruined it , and will lose many fleet sales, is it will become more expensive overall to lease a car , therefore it will hurt the industry , in car sales ,and the economy respectively . what do you guys think about this ????? http://www.nlc.com.au/2011-federal-budget/ Last edited by gtfpv; 12-05-2011 at 10:26 AM. |
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#2 | ||
Regular Member
Join Date: Apr 2007
Location: Croydon, VIC
Posts: 129
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I think there is still some benefit.
If I recall correctly (over 10 yrs sincs I had a N.L.) - all payments come out of your salary before tax, so it lowers your taxable income. - all running costs (including services) can be part of the package. - all accessories you buy during the life of the lease can be part of the package. I guess you'd probably have to run some numbers to see how worthwhile it is. (and check the rules and regs. yourself. I might have it completely wrong...) |
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#3 | ||
FF.Com.Au Hardcore
Join Date: Feb 2010
Posts: 1,242
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As long as your tax rate you currently fall in, is higher than the 20% fringe benefit tax rate, then you should still be in front.
Altho i did look into it a few years ago, and with some of the "mark up" the lease companies put into the leasing plan, there was marginal benefit between leasing and buying (after borrowing money from bank). Probably very little point now. |
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#4 | ||
GT
Join Date: Apr 2005
Location: SYDNEY
Posts: 9,205
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agree with above statements . but what about the market in general . a lot of people were turning over cars every 2 or 3 years which was good for the car market , and the 2nd hand ca r market . sales may drop off , or worse , it could be the demise of the falcon . just assuming , but i thought holden and ford had a huge chunk of new car sales to fleet buyers. wether this is due to operating leases versus novated leases i guess is the question . but i'm sure novated leases had still i big chunk of new car sales and turnover .
overall it means cars are becoming less affordable , which will see people maybe changing from leasing , to buying smaller imports , or buying 2nd hand . |
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#5 | ||
Critical Thinker
Join Date: Jan 2005
Location: Adelaide
Posts: 20,314
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I'm right on the verge of looking at leasing now.
I do about 20,000-25,000km per year. Looking to finance it through my business for 3 years. Second hand vehicle of about $27-30k. Im assuming I will fall under the blanket 20% rule based on the above criteria. Can anyone offer any more advice on whats best?
__________________
"the greatest trick the devil pulled, is convincing the world he doesn't exist" 2022 Mazda CX5 GTSP Turbo 2018 Hyundai Santa Fe Highlander 1967 XR FALCON 500 Cars previously owned: 2021 Subaru Outback Sport 2018 Subaru XV-S 2012 Subaru Forester X 2007 Subaru Liberty GT 2001 AU2 75th Anniversary Futura 2001 Subaru GX wagon 1991 EB XR8 1977 XC Fairmont 1990 EA S Pak 1984 XE S Pak 1982 ZJ Fairlane 1983 XE Fairmont 1989 EA Falcon 1984 Datsun Bluebird Wagon 1975 Honda Civic |
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#6 | |||
FF.Com.Au Hardcore
Join Date: Feb 2010
Posts: 1,242
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#7 | ||
Flairs - Truckers Delight
Join Date: Aug 2006
Location: Brisbane Northside Likes: Opposite Lock
Posts: 5,731
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You are aware there's already an existing active thread on the topic
http://www.fordforums.com.au/showthread.php?t=11327818 this thread is essentially a duplicate
__________________
Current: Silhouette Black 2007 SY Ford Territory TX RWD 7-seater "Black Banger"
2006-2016: Regency Red 2000 AUII Ford Falcon Forte Automatic Sedan Tickford LPG "Millennium Falcon" |
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#8 | |||
GT
Join Date: Apr 2005
Location: SYDNEY
Posts: 9,205
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Quote:
another thing to consider . a new car has GST . SO if you buy a 33 000 car from a dealer , your price will be 30 000 . if you buy private for 33000 , you'll pay 33 000. business leasing is much better than novated leasing . see an accountant . |
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#9 | |||
FF.Com.Au Hardcore
Join Date: Apr 2007
Location: Miranda, NSW
Posts: 6,771
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Quote:
The FBT tax rate is 46.5% , not 20......The 20 is the percentage of the vehicles base value used to determine the amount on which the 46.5% tax rate applies (after being grossed up by around a factor of 2). So if the value of the car is $50,000 your FBT is calculated as $50,000 x 20% x 2 x 0.465 = $9,300 p.a The benefit is calculated as the saving you make by paying car running expenses and lease payments in pre tax dollars versus post tax dollars compared to the cost of the FBT. The FBT itself would be paid out pre tax dollars as a salary sacrifice , so a net cost to the employee of $9,300 x 0.465 = $4,976 is he is on the toop marginal rax rate , or earns over $180k p.a net of the salary sacrificed amount
__________________
2005 BA MK2 FPV GT - 6 SPEED MANUAL , SILHOUETTE, SWISSVAX, SUNROOF, BILSTEIN AND LOVELLS, FACTORY GENUINE 19'S, X-FORCE STAINLESS QUAD CATBACK, ADVANCE HEADERS, 200 CPSI CATS, BLUEPOWER CAI, HERROD BREATHER KIT, 4:11 DIFF RATIO, MAL WOOD OPT 3+ CLUTCH, BILLET SHIFTER, MELLINGS 10227, NOW WITH REVERSE CAMERA/SENSORS, ALPINE SPEAKERS & SUB - CUSTOM TUNED TO 275 RWKW NOW WITH A NEW ADDITION - 2017 MUSTANG V8 GT FASTBACK - , 6 SPEED AUTO IN PLATINUM WHITE, Last edited by GT0132; 12-05-2011 at 01:12 PM. |
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#10 | |||
GT
Join Date: Apr 2005
Location: SYDNEY
Posts: 9,205
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Quote:
i'm in 37% tax rate , and my vehicle value 31500 at 32000km ppa , including all maint etc . has a net cost of $12532 pa x 3 yrs. i dont get it . and at the end i pay 47% residual balloon . thats @ 11% FBT. |
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#11 | |||
Critical Thinker
Join Date: Jan 2005
Location: Adelaide
Posts: 20,314
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Quote:
__________________
"the greatest trick the devil pulled, is convincing the world he doesn't exist" 2022 Mazda CX5 GTSP Turbo 2018 Hyundai Santa Fe Highlander 1967 XR FALCON 500 Cars previously owned: 2021 Subaru Outback Sport 2018 Subaru XV-S 2012 Subaru Forester X 2007 Subaru Liberty GT 2001 AU2 75th Anniversary Futura 2001 Subaru GX wagon 1991 EB XR8 1977 XC Fairmont 1990 EA S Pak 1984 XE S Pak 1982 ZJ Fairlane 1983 XE Fairmont 1989 EA Falcon 1984 Datsun Bluebird Wagon 1975 Honda Civic |
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#12 | |||
GT
Join Date: Apr 2005
Location: SYDNEY
Posts: 9,205
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Quote:
2ndly tax exemptions are better on new cars , everyone gets a slice of the action, companies, the employee , the petrol suppliers, the finance, the parts and maintenance turnover , the fleet company . the fleet company gets a cut off the sale of a new car , if the buyer buys he own car , they miss that sale , hence the upped interest rate on a 2nd hand car . i worked this out myself with different quotes and talked to relevent people which confirmed this . . anyhow . it was good for employment , with the actual owner getting the least benifit with all the risk . of course the governmet targeted the owner , which will rub off and have a flow on effect through businesses. |
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#13 | |||
FF.Com.Au Hardcore
Join Date: Apr 2007
Location: Miranda, NSW
Posts: 6,771
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Quote:
__________________
2005 BA MK2 FPV GT - 6 SPEED MANUAL , SILHOUETTE, SWISSVAX, SUNROOF, BILSTEIN AND LOVELLS, FACTORY GENUINE 19'S, X-FORCE STAINLESS QUAD CATBACK, ADVANCE HEADERS, 200 CPSI CATS, BLUEPOWER CAI, HERROD BREATHER KIT, 4:11 DIFF RATIO, MAL WOOD OPT 3+ CLUTCH, BILLET SHIFTER, MELLINGS 10227, NOW WITH REVERSE CAMERA/SENSORS, ALPINE SPEAKERS & SUB - CUSTOM TUNED TO 275 RWKW NOW WITH A NEW ADDITION - 2017 MUSTANG V8 GT FASTBACK - , 6 SPEED AUTO IN PLATINUM WHITE, |
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#14 | |||
Regular Member
Join Date: May 2010
Posts: 316
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Quote:
Summary from my leasing provider http://www.nlc.com.au/2011-federal-budget/ |
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#15 | ||
FF.Com.Au Hardcore
Join Date: Jan 2010
Posts: 11,268
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For those that genuinely do lots of work related mileage, what's to stop you leasing
but using log book method and getting a 221D variation on taxation and getting your money tax free to make work related payment portions of the vehicle's costs. I'm now thinking this is the best and fairest way for people who actually use their vehicles for work, I know a lot of people with novated leases that use it solely to drive from home to work and back, they're the ones the government is targeting but genuine people are going to get caught up in this... |
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#16 | ||
Banana
Join Date: Sep 2005
Location: Wandin North, VIC
Posts: 2,031
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I find it rather amusing that me, being a Federal Gov't employee and them allowing me to salary sacifice a novated lease, is now targeting its' own employees and penalising them. I currently am in the 11% FBT bracket utilising the employee contribution method.
At this stage all I can see is that my post tax contributions will almost double, making the sums on doing it again look less attractive.
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2024 Ford Ranger Wildtrak V6 w/PP 2012 WK2 Jeep Grand Cherokee Overland CRD |
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#17 | |||
FF.Com.Au Hardcore
Join Date: Feb 2005
Posts: 5,040
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#18 | |||
GT
Join Date: Apr 2005
Location: SYDNEY
Posts: 9,205
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Quote:
in reality it stops people having a family car less than 5 years old and a 15 year old car for work , so allows 2 recent model family cars in the one family , puts lots of highly depreciated 2nd hand late model cars out there for sale for the private bargain hunters who want a good 2 or 3 year old car for 1/2 price of new . the cake goes a very long way my friend . but your entitled to your opinion . |
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#19 | ||
FF.Com.Au Hardcore
Join Date: Jan 2010
Posts: 11,268
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I think 20% FBT is reasonable, those people doing closer to 90% business use
should be using the Log book method and those employees using notated leases for cars that do little if any business use should thank their lucky stars. I can't believe how many people just blindly take up novated leases without checking what the effective interest rate is and how much services and petrol are actually being charged at. If you doing it just to avoid paying 40% tax, just be sure that you aren't giving a lot more away than you should be... Last edited by jpd80; 12-05-2011 at 08:47 PM. |
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#20 | |||
GT
Join Date: Apr 2005
Location: SYDNEY
Posts: 9,205
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Quote:
you work for ford dont you . do you fancy a few more production day down times , as i wont now be renewing a lease deal , i'll go back to private 2nd hand ownership , or cheaper hyundi I20 DEALS . MANY OF US OUT THERE will also do the same . |
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#21 | |||
Banana
Join Date: Sep 2005
Location: Wandin North, VIC
Posts: 2,031
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Quote:
My cash is currently earning me more than what my interest is on my lease. Petrol is as per pump prices less GST, servicing is as per the manufacturers recommendations and I can choose where I have it serviced and how much I pay. I'm certainly not paying more than I should be, and I doubt others are either.
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2024 Ford Ranger Wildtrak V6 w/PP 2012 WK2 Jeep Grand Cherokee Overland CRD |
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#22 | |||||
FF.Com.Au Hardcore
Join Date: Feb 2005
Posts: 5,040
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Quote:
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so you cant have your cake and eat it too. |
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#23 | |||
FF.Com.Au Hardcore
Join Date: Feb 2005
Posts: 5,040
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Quote:
salary sacrifice is inherently unfair because it isnt available to all... eg. if my employer runs a daycare, i can effectively deduct my childcare expenses. use an independent childcare centre, no deduction. that's fair? a fair tax system treats people as equally as possible, not discriminate against employees who dont work for a big corporation. |
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#24 | |||
GT
Join Date: Apr 2005
Location: SYDNEY
Posts: 9,205
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Quote:
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#25 | ||||
FF.Com.Au Hardcore
Join Date: Jan 2010
Posts: 11,268
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Quote:
My company wanted to offer me a novated lease, my business usage is at or over 90% and generally, I was allocated a pool vehicle, Non FBT diesel ranger Ute but because I already had a good salary there was maybe room for a $5K increase for a Nov lease. You can see that immediately, I was going to go bloody backwards in a big way. So I said no thanks, I'll have a new pool non-FBT vehicle for work and some incidental use. Two and a half years later, My FG Ute has near 50,000 km on the clock, I still have my good salary and the company pays for all vehicle expenses. What I'm saying is, do your sums and see what the company will offer and if you do have a high business usage, talk to them about an non-FBT vehicle, it's much better. Quote:
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#26 | |||
Regular Member
Join Date: Apr 2008
Posts: 146
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#27 | ||
Regular Member
Join Date: Apr 2008
Posts: 146
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The "if you don't do 25,000 kms then it is not worth it is one of the biggest myths going around". The 20% applies to the base value (essentially the GST inclusive cost) of the vehicle. If you choose a cheaper vehicle, or second hand vehicle then you can still come out much better off than buying the car yourself. You still get all of the running costs out of your pre-tax.
The other thing most people are not aware of is that you get to keep the surplus of your sale price over your residual and you get that tax free. This makes shorter term leases very attractive especially where you are buying second hand. I have mainly done 1 year leases in the past (as you get a 65% residual). So if I buy a $20K 2 year old Berlina, I only owe $13K on it in 1 year's time. If I sell it for $16K I pocket the $3K tax free. That $3K will pay for a significant proportion of the following year's lease payments (after tax) on a replacement vehicle. Additionally the 20% FBT is only based on $20K (so $4K), so I'm a lot better off than the bozo who paid $40K for one new on a 3 year lease and is still paying FBT on $40K (20% = $8K) on the exact same vehicle in Year 3. Still lots to be had out of novated leasing, you just need to be clever about it and get good advice from an accountant. |
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#28 | |||
FF.Com.Au Hardcore
Join Date: Apr 2007
Location: Miranda, NSW
Posts: 6,771
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Quote:
Totally agree with this
__________________
2005 BA MK2 FPV GT - 6 SPEED MANUAL , SILHOUETTE, SWISSVAX, SUNROOF, BILSTEIN AND LOVELLS, FACTORY GENUINE 19'S, X-FORCE STAINLESS QUAD CATBACK, ADVANCE HEADERS, 200 CPSI CATS, BLUEPOWER CAI, HERROD BREATHER KIT, 4:11 DIFF RATIO, MAL WOOD OPT 3+ CLUTCH, BILLET SHIFTER, MELLINGS 10227, NOW WITH REVERSE CAMERA/SENSORS, ALPINE SPEAKERS & SUB - CUSTOM TUNED TO 275 RWKW NOW WITH A NEW ADDITION - 2017 MUSTANG V8 GT FASTBACK - , 6 SPEED AUTO IN PLATINUM WHITE, |
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#29 | ||
Moderator Ford Coupe Club
Join Date: Dec 2004
Location: Vic
Posts: 3,905
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A novated lease is not a "one size fits all" thing, it works well for some and not for others.
I tried it a few years ago as at the time it put me in front (not by much but still worth doing) but a change of circumstances put the kybosh on that. This involved being reassigned to another work area which meant being taken off shiftwork, the result being a $15K per year pay cut!! As a result I simply couldn't afford to continue with the lease so I had to bail out and god damn, did that sting!! I wouldn't do it again, I reckon the gains are just not worthwhile but that is just my particular situation. For others it's a great thing. As someone else has mentioned - see an accountant. You will get the best advice for your particular situation.
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Mitsubishi ASX Auto, White - Daily Commuter XC Fairmont Coupe, 351 4spd, Graphite Grey - The Antidote http://www.fordcoupeclub.org "If you don't know where you're going, any road will take you there" George Harrison 2001. |
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#30 | |||
FF.Com.Au Hardcore
Join Date: Feb 2005
Posts: 5,040
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Quote:
IMO, it would be far simpler if we just allowed workers to claim the cost of travel to and from work. bear in mind, in many states, this trip is already classed as a work trip by workers compensation. |
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