Anyones Passat on Novated lease?

[macdub]

Did you look at the employee contribution method? Where you make a post-tax payment equivalent to theFBT amount, reducing FBT liability to nil? My two employers when I had mine under lease both recommended doing this - although I wouldn't be surprised if this is no longer allowable. I'm not sure, since I bought mine outright about 18 months ago, because I didn't think leases were worth it then, and still don't (other than allowing better finance options when a car is new....).

I have currently lease on ECM method where I make pre tax and post tax contribution to nullify the FBT liability.

[cru22z]

I have about 30% on post tax payment.
My residual would be 14k by 2017. That makes my
MY12.5 about 6 years old. I'm hoping to break-even if I
run it to the 5 years term.

[MJW]

What is the advantage of paying the FBT liability post tax when I currently pay it pre-tax to reduce my taxable income?

Did you look at the employee contribution method? Where you make a post-tax payment equivalent to theFBT amount, reducing FBT liability to nil? My two employers when I had mine under lease both recommended doing this - although I wouldn't be surprised if this is no longer allowable. I'm not sure, since I bought mine outright about 18 months ago, because I didn't think leases were worth it then, and still don't (other than allowing better finance options when a car is new....).

[passatpout]

Because, unless you earn in the top marginal tax bracket, the total tax liability is less.. IIRC 30% compared to about 47%..your choice, you'd need to look at your own circumstances and work out whether it's worth it or not. In my case, it was - about $2000 annually, from memory..

[Marakai]

Been reading this thread with great interest as I'm kinda facing that decision.

I hate having car payments for longer than necessary, hate paying interest - but hate paying more taxes than I need to even more.

Yet, the whole novated lease complex just leaves me scratching my head. Because it seems you can't actually get at the meat of the underlying math. Oh yeah, there's all these wonderful "novated leasing calculators" and lo and behold not matter what I seem to type into there it always looks like I'd "save money/taxes". But compared to what? I'm too much of a math/science geek to not ask "what are your formulas and what data are you precisely using?" and the leasing companies never seem to come through with that.

I've created my own spreadsheet into which I punched all sorts of comparisons: outright cash, various combinations of finacing (different down payments, different run-times), adding running costs for the vehicle and then tried to reverse engineer the novated lease calculations based on what I found from the ATO.

Even at my salary range (which is now very near the top tax threshold, curse you, ATO ) I just can't seem to make these numbers come out such that I *really* end up with an advantage.

This whole thing just seems like such a... I dunno, ... scam! Maybe I'm overlooking something and would love enlightenment, but at this moment it looks like it's just a shell game which allows people to drive more car than they could normally afford. Especially if you go by the "well I'll always have a car payment one way or the other" anyway.

What am I missing?

At this moment it looks like the best combo is to make a decent (30%) down payment, then finance for 3 years and then be done with it. Overall interest remains minimal that way, I don't tie up too much cash that I could otherwise invest of have work for me and I don't spend years making car payments. But there's nothing from the ATO that way. That irks.

[clip]

Yet, the whole novated lease complex just leaves me scratching my head.

see if you can find a good, reputable, no-nonsense company that specialises in novated leasing/salary sacrificing. Mine goes through the math with me each time and it always comes out better. However, one qualifier, it's only better than if I were still going to finance a vehicle (e.g. personal loan or other standard finance arrangement).

Other advantage is I never have to negotiate discount (saved $7k on this one), just negotiated a few free services. There are a few things you can also tweak to get slightly better advantage, especially if you intend not seeing out the term of the loan - e.g. making advanced payments with your pre-tax dollars etc. (although this may depend on the finance company).

[Marakai]

see if you can find a good, reputable, no-nonsense company that specialises in novated leasing/salary sacrificing. Mine goes through the math with me each time and it always comes out better. However, one qualifier, it's only better than if I were still going to finance a vehicle (e.g. personal loan or other standard finance arrangement).

Other advantage is I never have to negotiate discount (saved $7k on this one), just negotiated a few free services. There are a few things you can also tweak to get slightly better advantage, especially if you intend not seeing out the term of the loan - e.g. making advanced payments with your pre-tax dollars etc. (although this may depend on the finance company).

Thanks for that! Any chance you could say what company you went with? PM is fine if you don't want to post it here. My employer has an agreement with one, but I don't think I'm obligated to go with them, but that way I can compare numbers.

Cheers!

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My employer has an agreement with one, but I don't think I'm obligated to go with them, but that way I can compare numbers.Cheers!

From my understanding, legally you're not obligated to use them. PM sent.

[cru22z]

For me advantages are the Less GST on all
Car related items such as the car, fuel and maintenance cost.
Not having to worry about if I have enough money for
Service/Fuel/Tyres when I need to.
Also having it come out of my salary is I don't end up spending
It on something else. Plus huge discount on the car.

[FSI 220]

For me advantages are the Less GST on all
Car related items such as the car, fuel and maintenance cost.
Not having to worry about if I have enough money for
Service/Fuel/Tyres when I need to.
Also having it come out of my salary is I don't end up spending
It on something else. Plus huge discount on the car.

Yeah, that!