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Salary Sacrificing - Novated Car Leasing

Discussion in 'Money Management' started by tc123, 24th Apr, 2012.

  1. tc123

    tc123 Tom

    Joined:
    4th Nov, 2011
    Posts:
    40
    Location:
    Australia
    Wondering if Novated Leasing/ Salary sacrificing is a good thing?
    Does anyone else do it? Pro's & Cons?

    I dont really need a car for work, in fact I get the train to work every day and only drive my $4000 car (fully owned outright) 2km per day!

    Is it worth it for the tax benefits?
    From what I understand, the 'repayment' for the car lease comes out of your pre-taxable income..
     
  2. GregR

    GregR Reid Consultants

    Joined:
    13th Jul, 2009
    Posts:
    273
    Location:
    Berwick Vic
    Tom,
    A quick answer is that if you are doing something just to get tax benefits, then its not worth doing.
    Purchasing a new or near new car when you hardly use it sounds like a poor investment to me, where the car is a depreciating asset.

    Unless you are in a company or organisation where you get exempt or concessional fringe benefit tax treatment, salary sacrificing for a novated car lease generally does not save you any money.

    Greg
     
  3. TDFawaz

    TDFawaz Tony

    Joined:
    1st Jul, 2010
    Posts:
    40
    Location:
    Brisbane, QLD
    My issues with novated lease

    Hello,
    I actually had one of these a while ago and I had an issue when I wanted to quit my job and get another job - to get a new employer to agree to take it over.

    Because if they couldn't, then I couldn't afford to keep it. I was stuck with it all.

    I was stressed out about it but it all worked out ok. I ended up keeping my job after I spoke to my boss about my issues!!
     
  4. something_wrong

    something_wrong New Member

    Joined:
    12th Sep, 2011
    Posts:
    2
    Location:
    here and there
    It works for me but i do about 25,000 - 30,000km per year for work,

    So i have kept a log book and run about 90% business use, I do a log book every year, even though i dont need to, but it gives me the security of knowing i can justify my tax claim each year.

    I used to drive a dual cab ute but now have a Sportswagon due to role change.

    If you do that little KM i doubt it would be worth it, especially as i think they have changed the fringe benifit tax rate, Best bet speak to a accountant.
     
  5. realestate_basket

    realestate_basket Member

    Joined:
    11th May, 2010
    Posts:
    12
    Location:
    Sydney, Australia
    Totally agree with Greg here. It's not a good idea to buy something for tax benefits when you don't actually need it. Having a car adds lots of extra expenses such as insurances and maintenance any way.