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Novation, ECM and tracking expenses

Discussion in 'Accounting, Tax & Legal' started by just-a-name, 30th Aug, 2010.

  1. just-a-name

    just-a-name New Member

    Joined:
    30th Aug, 2010
    Posts:
    1
    Location:
    Mount Waverley, Victoria
    Hello, (first time poster)

    I want to novate lease a car and I have been recommended by both an accountant and the leasing company to just novate the lease payment (not running costs) and then use what I spend on fuel, maintenance, insurance etc... from my post tax salary as a way to reduce the Fringe Benefit (dollar for dollar).

    My question is how do I track these expenses? Do I just give my employer the receipts monthly, or do I fill in a declaration in March telling my employer what I've spent over the year, so that they can do a reconciliation of my FBT liability, or is there some other way this is supposed to work?

    The following site seems to imply a declaration given to the employer is enough...

    What is the Employee Contribution Method (ECM)? | Novated Lease ECM | Australia | New Zealand - FleetPlus
     
  2. shannons

    shannons New Member

    Joined:
    3rd Sep, 2010
    Posts:
    1
    Location:
    Arundel Qld
    Hi Just a name,

    Course you could just novate the lease payments and keep a log (tax invoices preferred) of all expenditure for the vehicle and claim those costs against the FBT (Employee Contribution Method).

    However, as we have seen, quite often, the (non lease) expenses can exceed the FBT amount, meaning the novation isn't returning you the best tax deduction possible.

    Have your employers fleet provider do you up some real salary impacts, lease only and fully maintained.

    Also, the added benefit of putting everything through the fleet provider, is that you don't have to dig into your pocket at all. no keeping any receipts either.

    shannon
    Zenra - Fringe Benefits Tax Page