Any know the intricacies of the different option of leasing a car? I'd probably be able to squeeze 40%-50% usage for business.
I know the bare basics but looking for more info on things like Lease/Novated Lease, Commercial Hire Purchase and any other (if there are any) of the structured products finance companies have.
My basic understanding is that.....
...a Lease is paid out of your after tax dollars and is claimed in your tax return. You have the option of claiming cents per kilometre determined by the size of the engine or you can keep a log book for 12 weeks, work out the % used for work and claim that percentage of all expenses, I'm assuming only interest expense component too not the principle part of the lease payment.
...a Novated Lease is paid out of pre tax dollars and includes an estimated amount for running costs (tyres/fuel/servicing). Because its all paid from pre tax dollars there's nothing to claim but it does come back and bite you in the ar$e with FBT which is calculated on the price of the car and the km travelled. From what I understand a cheap car doing heaps of km's works out really well on a novated lease (little FBT to pay).
.....a Commercial Hire Purchase (I am even more iffy about my understanding of this but..) your dont actually pay any principle amount in the monthly fee because its defined as a rental/hire payment, therefore the whole amount is tax deductible. From what I understand the monthly payments are more than other types of finance because the owner/finance company wears the capital loss of the vehicle but is able to depreciate the vehicle on their books, As you dont own the vehicle you cant depreciate it. At the end of the term you can hand it back or purchase it.
So how'd I go? am I completely off base? and what circumstances and why would any of these or other options be better than any other?
Is it best to just buy a vehicle outright? Are they all subject to GST? if not will it make a difference?
Cheers
I know the bare basics but looking for more info on things like Lease/Novated Lease, Commercial Hire Purchase and any other (if there are any) of the structured products finance companies have.
My basic understanding is that.....
...a Lease is paid out of your after tax dollars and is claimed in your tax return. You have the option of claiming cents per kilometre determined by the size of the engine or you can keep a log book for 12 weeks, work out the % used for work and claim that percentage of all expenses, I'm assuming only interest expense component too not the principle part of the lease payment.
...a Novated Lease is paid out of pre tax dollars and includes an estimated amount for running costs (tyres/fuel/servicing). Because its all paid from pre tax dollars there's nothing to claim but it does come back and bite you in the ar$e with FBT which is calculated on the price of the car and the km travelled. From what I understand a cheap car doing heaps of km's works out really well on a novated lease (little FBT to pay).
.....a Commercial Hire Purchase (I am even more iffy about my understanding of this but..) your dont actually pay any principle amount in the monthly fee because its defined as a rental/hire payment, therefore the whole amount is tax deductible. From what I understand the monthly payments are more than other types of finance because the owner/finance company wears the capital loss of the vehicle but is able to depreciate the vehicle on their books, As you dont own the vehicle you cant depreciate it. At the end of the term you can hand it back or purchase it.
So how'd I go? am I completely off base? and what circumstances and why would any of these or other options be better than any other?
Is it best to just buy a vehicle outright? Are they all subject to GST? if not will it make a difference?
Cheers