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Old 05-14-2004, 05:59   #1 (permalink)
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Join Date: May 2003
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Novated Lease

Hi

Looking at buying the missus a car at her work through a novated lease. Got the figures etc and good deal......I think. Unsure of tax implications, benefits etc. Ne1 got websites or references in easy to understand terms how these leases work and things to look out 4 ? Must find a new accountant!!!!!

Cheers
NB
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Old 05-14-2004, 06:34   #2 (permalink)
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Re: Novated Lease

The most important thing to look at is km's travelled per year. If it's below 25,000, you'll get stung for a lot of Fringe Benefit Tax (FBT). If between 25,001 and 40,000, you pay something like 7% of the FBT base value of the car in FBT.

The best way to operate a novated lease is via the logbook method. This is called an operating lease....works out well if business km's run at between 75% and 90%. It's all salary packaged, i.e. you pay for the car before you give Jonny 'Bollocks" Howard his tax dollars and you significantly reduce your FBT.

Log on to Car expense deductions from the ATO get more info on this.

I did some calculations recently and I found that by using the logbook method, my FBT was reduced from $486 per month to $126 per month. All other running costs remain the same. I ended up going Commercial Hire Purchase though as this meant I could afford a much better car for the same money. I do 90% business km's.

Speak to an accountant that knows a bit about leasing and they should give you better advice.

Hope this is of some help.

The Big Chook.
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Old 05-14-2004, 06:42   #3 (permalink)
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Re: Novated Lease

http://www.ato.gov.au/businesses/con...tent/23465.htm

Questions & answers on Novated Leases.
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