Originally Posted by XWGT
Yep that works
Other way is to just novate lease the vehicle and all expenses are classed as personal contributions that eliminate your FBT liability
You may be on to something here:
By novating the vehicle, the vehicle is still registered in your own name, and an agreement (called a novation agreement) is drawn up between yourself and the company, the company agreeing to pay your lease payments.
While the novation agreement is in place the car will become subject to FBT and the company will be able to claim a tax deduction and GST back for the lease payments, and on all the other costs I listed above (excluding depreciation as the vehicle would not be owned by the company).
But if you cancel your novation agreement with the company, all future expenses become yours and the company does not get the tax deduction or the GST claim, and you will therefore not be subject to FBT.
This seems to leave a window of oportunity for you to get a novation agreement in place with the company, collect the saving I listed above than cancel the novation agreement with the company before the end of the lease, payout the residual in your own name then sell the vehicle in your own name at a profit which will be tax-free.
Seems to good too be true and probably is. It may constitute a tax scheme by the Australian Tax Office, and would probably only be uncovered in an audit. I would be careful, timelyness would be the key, selling it straight after you payout the lease might seem like an obvious scheme waiting 6 months, 12 months or longer might not, its hard to make a call on these things sometimes, tax law is not always black & white more grey. Thing is, this is unusual as you usually don't make a profit on motor vehicles.
But there is another problem:
Originally Posted by fordel
You can only novate lease a car that is going to be less then or equal to 5 years old at the end of the lease period
fordel has it covered thou, thou I have heard 7 years from own finance broker at work. If any one knows of others that who fiance greater than 7 years please let me know of the name.