Car Leasing -cash flow

[locko24]

Care to share how it costs you nothing ?

I thought the example i gave showed that!?!

To simplify... Expenses i have to pay each week, whether i have a new car or old, are deducted before tax. That saving in tax pays the lease payment on the car!

So it works out the same whether i have a car with no finance over it and pay the expenses post-tax; or drive my 5 year old V10 twin turbo Touareg (apparently a 'clanger') and pay the expenses pre-tax!!



*Example true in my case only. Please obtain independant advice.

 

[Success]

To simplify... Expenses i have to pay each week, whether i have a new car or old, are deducted before tax. That saving in tax pays the lease payment on the car!

So it works out the same whether i have a car with no finance over it and pay the expenses post-tax; or drive my 5 year old V10 twin turbo Touareg (apparently a 'clanger') and pay the expenses pre-tax!!

I find this difficult to understand ...

You are saying that your tax savings cover your lease repayments on a Touareg ???? Could you perhaps show a little more breakdwon in details so me and others here can understand ?

 

[locko24]

Ok

This is a simplified/hypothetical version of events.

Example 1:
I own a car out-right. My running expenses for that particular car are $200 per week. Paid for after paying tax.
End of story!

Example 2:
A lease arrangement.
My running expenses are still $200 per week, but deducted pre-tax. Let's say i save $60 in tax. After tax, my running expenses are $140. The $60 i have saved is my lease re-payment. (I neglected to mention that the lease is for the DEPRECIATION on the car - my mistake!)
At the end of the lease i either pay out the remaining value of the car, and keep it, or trade it in on a later model and begin a new lease.


So you're not actually paying the car off, which may take some getting used to, but you do get a car for the lease period for 'free'.

Hope this makes sense!

Cheers
Locko

 

[Success]

OK - so $60 savings per week x 52 weeks = $3,120.

Your are then saying your lease costs are $3,120 per year using example above ? Correct ?

 

[Deena]

I have a novated lease, which I salary sacrifice, best thing since sliced bread.

 

[Success]

I have a novated lease, which I salary sacrifice, best thing since sliced bread.

Keen to share ... What car ? Maths ?

 

[locko24]

OK - so $60 savings per week x 52 weeks = $3,120.

Your are then saying your lease costs are $3,120 per year using example above ? Correct ?

Correct, for the above example.
So if the km travelled increases (running costs), or the tax rate is higher, the higher the repayment that it would cover.

 

[tom32]

At 5 years cars are pretty much at the end of their economic life and ready to be taken on by people who have the time and patience to take a chance on them and endure the headaches of breakdowns, costly repairs etc.

You sound like a Ford man...

Get yourself a Toyota and you will not be saying cars are at the end of their economic life at 5 years.

 

[Ausprop]

You sound like a Ford man...

Get yourself a Toyota and you will not be saying cars are at the end of their economic life at 5 years.

nope - just a realist. new cars are so cheap and the deals can be so good and there is a big pool of buyers to sell into at the lower price point for a 5 year old car that ibelieve they sell above their intrinsic value. A mate just sold his wifes 3 year old Rav.. I think it ended up costing him about $3k a year all in for servicing, tyres, depreciation, the lot. Why stuff around with old cars for that sort of money? Anyway i shouldn;t be trying to change behaviour... buy up all those old cars people!! I have a 4.5 year old CX7 if someone is looking for low mileage good as new car, driven by a little old lady to the shops once a week... years of trouble free motoring ahead

 

[sage26]

We are very new to novated leasing and I'm still getting my head around the FBT and other tax implications before we decide to go ahead.

For those of you with a novated lease and investment properties, is there anything I need to be aware of in terms of the effect on my overall tax or ITWV?

Off the top of my head, lease payments pre-tax will reduce my taxable income and this may potentially affect which tax bracket I fall into when taking into account any negative gearing as well?

Will the lease company need to take this into account when calulating the package?

 

[VYBerlinaV8]

If you can (legitimately) assert that you are an itinerant worker (as I am) for tax purposes, you can do better than a novated lease by buying outright and tax deducting the business proportion of running costs provided your proportion of business use is over about 70%.

I am doing this with my new WRX I bought this year. Because I am required to attend multiple places of work during the day, including working from my home office, my business use proportion of total vehicle use is about 80%. Thus, I can deduct 80% of all vehicle costs, including:
* Petrol
* Tyres
* Servicing
* Rego
* Insurance
* Interest on the loan (if applicable)
* Depreciation of the vehicle

And the best bit? NO FBT! Also, I can do whatever I want with the vehicle and am not bound by lease break costs or similar hassles should I decide I no longer want the vehicle, or wish to use a different vehicle.

Also, I only do about 15,000 km per year.

 

[Deena]

Sage, if you novate a lease the lease company will not take anything else in to account. My bank looked at my taxable income, I salary sacrifice nearly a grand a fortnight, so on paper my income is not wonderful. When I pointed out my salary sacrifice and what I sacrificed they actually took that in to account as income. The bank guy was envious as he could not sacrifice as much as I could.

The grand a fortnight I sacrifice is not just my novated lease, there are several things I do.

Figure breakdown for lease, sorry no idea. I love the fact I pull up at the bowser and never have to have cash it just goes on my fuel card, any expenses at all just get authorisations and I do not see the bill, except for car rego and insurance, I pay for them, claim and the money is in the bank in no time, pre tax wonderous. When my lease runs out next year I will be getting another new car. Sure I have a payout figure for the car, but considering it will be a 5 year old Toyota Conquest think I will get more then my pay out figure back when I sell it.

 

[jaycee]

If you can (legitimately) assert that you are an itinerant worker (as I am) for tax purposes, you can do better than a novated lease by buying outright and tax deducting the business proportion of running costs provided your proportion of business use is over about 70%.

I am doing this with my new WRX I bought this year. Because I am required to attend multiple places of work during the day, including working from my home office, my business use proportion of total vehicle use is about 80%. Thus, I can deduct 80% of all vehicle costs, including:
* Petrol
* Tyres
* Servicing
* Rego
* Insurance
* Interest on the loan (if applicable)
* Depreciation of the vehicle

And the best bit? NO FBT! Also, I can do whatever I want with the vehicle and am not bound by lease break costs or similar hassles should I decide I no longer want the vehicle, or wish to use a different vehicle.

Also, I only do about 15,000 km per year.

Good to know VY (not applicable to me now ut good to know.

Simplicity is sometimes the best