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post #1 of 16 (permalink) Old 02-11-03, 10:47 PM Thread Starter
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Novated/personal Leasing?

Anybody that is familiar with the idea of leasing please shed some light.

I will be interested in either XR6T, FPV XR6T (if there is one), or GT.. so the price range will be between 44,000 - 60-000.

What is included in the lease payments??

Does age have any affect??


Age : 26
income : ~65 (i have investments that contribute to this figure, does leasing use overall income or just work?)

Any ideas and advise appreciated.

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post #2 of 16 (permalink) Old 02-11-03, 10:57 PM
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A huge DEPENDS!!!! Depends on the package your employer offers you, what you feel comfortable repaying, where your priorities are for savings etc.

I have looked into personal novated leasing, where you are effectively paying off a loan of a portion of the vehicle over a fixed period, out of your pre-tax income. This comes into it's own when you factor in the savings in tax from your salary.

Speak to an accountant to get some firm figures, as they will vary with the combination of the following :
* Your current salary (dictating which tax bracket you are in)
* Intended usage, or km of "business use" per year - this is used to calculate input tax credits or some such thing, which reduces your FBT (fringe benefits tax)
* Best interest rate you can find for the lease (from 7-12% these days, 9-10% seems the most common figure for non-fleet private schemes)
* The term of the lease and agreed residual %

There are too many variables to give you any meaningful figures, because of the above - having said that, my figures came out to be ~$190 / fortnight (after tax) for a $40,000 vehicle over 3 years @ 40% residual. Of course this figure is meaningless to anyone else unless you're mysteriously using identical figures to me!

Bottom line - if you are intending on keeping the vehicle for a while, novated leasing can give you some great tax savings. Just beware though, as running costs etc. are not included in that scheme!

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post #3 of 16 (permalink) Old 02-11-03, 10:58 PM
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Hope this helps :)

"The Contribution Method has been developed to provide an additional method of structuring a Novated Lease that will benefit those employees whose income is not in the top marginal tax paying level.
This method can run in tandem with your existing program and enables a far broader range of salary levels to benefit from Novated Leasing while actually improving the benefit levels some employees now experience.
To date most Novated Lease programs have functioned using the 'Statutory Formula Method'. With this method the total running costs of a vehicle along with a 'grossed up' fringe benefit tax (FBT) component were added together to become the Annual Salary Sacrifice amount. This amount was then deducted from an employee's gross salary and held by the employer for the purposes of paying the vehicle running cost expenses and F.B.T.
The F.B.T. component in this method is charged to the employee at the top marginal tax rate regardless of the actual salary being paid. This has the effect of limiting the use of the Novated Lease to those employees whose salary was greater than $50,000 p.a. (at which the top marginal rate cuts in).
However, with the changes that occurred to the personal tax scales under the New Tax System, the top marginal rate does not commence until a salary of $60,000 is achieved. This has resulted in around 80% of all tax payers being be in the 30% tax bracket.
Under the Statutory Fraction method this tax restructure marginalised the benefits that could accrue to employees involved in a Novated Lease whose salary is under the $60,000 mark.
Given the above, SMB NovaLease set about investigating alternatives to the Statutory Fraction Method that could maintain or improve benefits to employees without significantly increasing the administration for our client companies.
The alternative arrived at is the Contribution Method.
The Contribution Method is well established in tax law and allows an employee to make a contribution towards the running costs of their motor vehicle from their After Tax (Nett) Salary.
For every after tax dollar that an employee contributes to the running cost of their vehicle they reduce the FBT liability on the vehicle by the same amount.
In practice, this means that, as a substitute for FBT, an after tax contribution may be paid by an individual Employee up to the amount of FBT that would be required under the Statutory Fraction Method.
For example: An employee is driving a $30,000 vehicle 20,000 kms p.a. (FBT rate = 20% for this level of travel).
The employee may contribute $6,000 p.a. ($30,000 X 20%) toward the running costs of the vehicle and completely remove the F.B.T. that would otherwise have been payable.
The employee may then Salary Sacrifice the remaining running costs from their pre tax salary without any additional F.B.T. being incurred.
Calculations show that the benefits provided by using the Contribution Method are an improvement on the previous arrangements (Statutory Fraction) for many employees, particularly under the new tax regime. "
1. cars only:

General intro to motor vehicle packaging

The actual novated lease calculator

2. more general:


Custom fleet, with Fleetcard (discounts on petrol, etc):

Salary Packaging calcs: NAB and Custom Fleet:

CCH Software product:

MCMS Salary Package Modeller online:

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post #4 of 16 (permalink) Old 02-12-03, 01:27 AM
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GO a hire purchaes lease it is better is some cases like me you pay no fbt tax and you can make money if you do it right.

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post #5 of 16 (permalink) Old 02-12-03, 01:28 AM
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ohh and shop around i got a new lease the rate was 6.37 pa

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post #6 of 16 (permalink) Old 02-12-03, 02:28 AM
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I use the after Tax contribution method and do at least 25k p/a, this way I pay no FBT at all. In addition to the tax savings we get a large benefit from Family Allowance and Child Care Rebates.

The bottom line IMO is, If you have the opportunity, Go for it.

Cheers, Bazza.
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post #7 of 16 (permalink) Old 02-12-03, 02:40 AM
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Couldnt agree more, a great way to go if its available to you.
Costs can be offset against your FBT liability, so the nett after tax $ you pay for the car make it a bargain
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post #8 of 16 (permalink) Old 02-12-03, 09:08 PM
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I also use the Contribution Method and have to spend approx. $6k per annum on my XR8 as I do in excess of 25000 klms per year. One note that I also found the last time I investigated was that if you take a lease over 5 years, the final years FBT is calculated on the Market Value of the vehicle rather than the Cost Price used in the previous 4 years.

Also, if you go the GT, you will have to pay Luxury Tax - while it's not a huge amount, you will need to consider this.

Note: You will find that with the new Tax laws, the calculated FBT appears on your Group Certificate and MUST be included in working out any Family Benefits available.

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post #9 of 16 (permalink) Old 02-12-03, 09:39 PM
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I also lease my car (pre tax salary sacrifice) Ultimately the number of K's you do in a year is a big factor in figuring out if it is all worth the trouble. You need to do at least 25,000km to get into the 6% tax bracket. If you do more than 40,000km then you drop down to 2%. So for a $45,000 car you pay about $5/6K in FBT a year for over 25,000km to 40,000km. and about $2.5K for over 40,000km. I do $40,000km + each year so it is all worth it. I use Novalease. They are really great to deal with.
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post #10 of 16 (permalink) Old 02-13-03, 05:30 AM Thread Starter
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Thanks for all the input guys.

It really does seem that leasing is not the optimal method for me as the lease payments would have to come from my employer. My salary at work is low 40's, so i don't think it's quite enough to make it viable, and the k's per year could be a problem.

I need to somehow see what works for me best, and need to be able to contribute to the payments from more than 1 source of income.

thanks again guys.
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