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Novated lease or buy a car? (paramedic / FBT exception)

Discussion in 'Financial Planning' started by cecils, 25th Oct, 2008.

  1. cecils

    cecils New Member

    25th Oct, 2008

    I would be most greatful for some advise if possible:

    I am a currently looking at the option of a novated lease for a used $20k car but am still unsure whether it is the most efficient option. Probably worth noting that I am a public health care worker (paramedic) based in QLD and as such, am elgible for 18k FBT excemption per annum. The numbers seem to be pointing towards salary packaging the car but these numbers only seem best over the term of the lease (ie once the lease is over, the buy out cost is $9K for the leased car but if I bought a car outright, the total resale is mine to keep / reinvest in the next car).

    Hoping someone has had a similar problem.


  2. AsxBroker

    AsxBroker Well-Known Member

    8th Sep, 2007
    Sydney, NSW
    Hi Cecil,

    Salary packaging only saves GST if you are on the 30% Marginal Tax Rate bracket, if your on a higher income (above $80k) you'll start getting better taxation savings.

    You'll find that the Salary Packaging Exemption is much more attractive, your employer can pay it to a key or credit card to spend on the usual expenses (groceries, etc).



    PS Before making a taxation decision speak to your tax adviser or accountant first.
  3. ashwright

    ashwright Well-Known Member

    30th Nov, 2007
    Brisbane, Qld
    What about an associate lease?
    I looked into this last year, basically you have an associate (like a spouse) buy the car. Your employer leases the car of the associate, and takes the cost out of your salary.

    Ie there is no finance company involved. So no interest costs.

    Advantages are costs are taken out before tax, and you may not have to pay GST on costs (my employer is GST exempt). And FBT might be in your favor.
    Disadvantages are the associate has to declare the income, but gets to declare the costs as deductions. (So should be close to neutral.)

    Not saying this is what you should do, but I looked into it last year and it looked like a good deal. However because I did not drive the car much, FBT took out a lot of the savings.