novated lease and tax

[cav]

Hi I currently have a car worth between 30K to 35K and am thinking of moving the capital from this to a couple of pos geared properties that would be then used to pay for a novated lease offered by the company that I work for on another vehicle.

I'm under the impression that the cost of the lease would come directly of my income. So if I earn an extra 10k and the vehicle cost was 10k no change in taxable income!

Am I misguided?

The intended effect would be the capital would be parked and not depreciating and the costs of the car would be moved to the properties.

 

[CruzAccountant]

Cav

Your thinking seems logical. If you can do the kms to get you a tax advantage, then move the capital to your IP, you'll pay less interest in the IP (therefore increasing cashflow).

It's worth doing the numbers, but the theory of it is logical.

Richard

 

[Ms Jade]

Just a word of caution about this strategy. You may well find that the lease repayments are regarded as your personal liability (which is true) by the bank. What you can allowably service now will change if you're paying $1000/mth in car repayments. Make sure that your serviceability won't be drastically curtailed down the track by a car loan.