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Old 09-25-2003, 05:31   #1 (permalink)
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Silly employer… can I still lease?

I’ve been looking at leasing a vehicle. My work doesn’t accommodate pre-tax payments for employees making a novated vehicle lease impossible for me… or does it? Are there any ways around this (as in is it possible to have my FBT deducted from my gross pay by a third party somehow or is there some requirement on Limited companies to provide this service or is it easy to convince them to change their minds) or must I search for another job? Damn it I want that XR8!
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Old 09-25-2003, 05:34   #2 (permalink)
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Re: Silly employer… can I still lease?

Oh and I'm in the upper part of the 30% income tax bracket... those of you here who know a fair bit about this, do you think that salary is reasonable enough to expect to lease a $53000 ish car?
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Old 09-25-2003, 07:22   #3 (permalink)
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Re: Silly employer… can I still lease?

Try www.Prosperion.com
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Old 09-25-2003, 07:25   #4 (permalink)
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Re: Silly employer… can I still lease?

yeah I'm still waiting on a call back from them but I think that the whole exercise will be futile if my employer refuses to accommodate the lease!
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Old 09-25-2003, 15:57   #5 (permalink)
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The whole idea of Novated leasing is that the company is involved in the sub-lease - so if the company won't make pre-tax payments then it probably won't novate the lease and make the payments on it.

That inocme bracket is prob ok for getting finance approved but probably not very efficient for actually saving anything by going to a novated lease as opposed to normal finance. You really need to have all of the payment component of your salary in the 47% bracket to get the saving.

The FBT on a $54k car would also be substantial unless you intend doing 40000kms plus

Have you used any of the online calculators to work out what the actual costs/savings are? I'd reccommend talking to your/an accountant as well.
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Old 09-25-2003, 16:33   #6 (permalink)
 
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Re: Silly employer… can I still lease?

All good points
While there is no reason why an employer should say no, there is no obligation for them to accommodate a novated lease either. Sounds like your employer is a little pig headed.
As for tax savings, its only really effective (and not much anymore) if your in the 47% tax bracket. By the time you add the FBT etc, its really not worth it on anything less, and hardly worth it anymore on 47%

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Old 09-25-2003, 17:13   #7 (permalink)
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Re: Silly employer… can I still lease?

Quote:
Originally Posted by Brendan
That inocme bracket is prob ok for getting finance approved but probably not very efficient for actually saving anything by going to a novated lease as opposed to normal finance. You really need to have all of the payment component of your salary in the 47% bracket to get the saving.
Yeah good point, I can see how you'd want the entire payment to be otherwise subject to 47% income tax, that would really help to offset the interest on the cost of the car. As much as I'd love the 7% FBT attracted at 40,000, there's no way I'd do that much in a year so I'd be realistically looking a the 11% 25,000 bracket which is still a reasonable reduction on 30%

Quote:
Originally Posted by Brendan
Have you used any of the online calculators to work out what the actual costs/savings are? I'd reccommend talking to your/an accountant as well.
Yeah I have... the thing is the "savings" are referenced to buying a new car outright aren't they? I'd not be purchasing a new car outright so the comparison is not really applicable. What I'd want to do is free up the equity in my EL and invest that in say a managed fund or something easily liquid able and pay for the new car and running costs fortnightly / monthly from pre-tax dollars... the calculators don't accommodate this scenario. It's probably something I'd have to run some figures on with an accountant to see what I'd save or loose. Nevertheless, as disappointing as it is, perhaps it's a good thing that my employer is pig-headed [ you're spot on XWGT ] as it'll force me to wait an extra year to hit the 47% bracket at which point it becomes more cost effective.
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Old 09-25-2003, 21:19   #8 (permalink)
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There are a few things to consider being making the decision to salary package a car for example:

You might as well forget it if the following applies to you:

1. You have little to no work use (note driving from home to work ordinarily isnt work use)
2. Your annual klms are low, particullary if <25K pa
3. You annual salary is low, mainly where <60K pa
4. The cost of the car is high, particullary if higher than the luxary car tax limit.
5. You are the type to want a new car every couple of years or less (as lease companies generally want to lock you in for a number of years, and getting out of them is vertually imposable without major financial penalty) They may do 2 years but with charge a higher interest rate.

I started a thead talking about some of the issues: see "here"

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Old 09-27-2003, 19:28   #9 (permalink)
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Re: Silly employer… can I still lease?

if you could settle for a Ute there is a way to get one FBT exempt, under a novated arrangement...

See sections 4.6 and 18.2 here:

http://www.ato.gov.au/businesses/con.../fbt_guide.htm

(relevant tax ruling is MT2024)

Most accountants refuse to believe you can get a car FBT free, so if you persue it you basically have to force it down their throat. I ended up having to get a personal ruling from the ATO.

btw there are companies that will take care of all the FBT reporting for you, but they often sell their services as a complete salary packaging solution - and they charge large fees.

edit: oh and by the way, Ford have a spreadsheet list of cars applicable to MT2024 (XR6 Turbo and XR8 stylesides are included). I can arrange for the list if anyone is interested.

Last edited by forrestd; 09-27-2003 at 19:55.
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Old 09-27-2003, 19:43   #10 (permalink)
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Re: Silly employer… can I still lease?

Quote:
Originally Posted by Ford Grunt
There are a few things to consider being making the decision to salary package a car for example:

You might as well forget it if the following applies to you:

1. You have little to no work use (note driving from home to work ordinarily isnt work use)
2. Your annual klms are low, particullary if <25K pa
3. You annual salary is low, mainly where <60K pa
4. The cost of the car is high, particullary if higher than the luxary car tax limit.
5. You are the type to want a new car every couple of years or less (as lease companies generally want to lock you in for a number of years, and getting out of them is vertually imposable without major financial penalty) They may do 2 years but with charge a higher interest rate.

I started a thead talking about some of the issues: see "here"

Cheers
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