Novated Lease/Salary Packaging
Discussion
My future employer in Australia offers a novated lease scheme via https://www.smartsalary.com.au/
This basically allows me to lease a fully maintained lease car through the company and pay for it from my gross pre-tax salary and paying ~20% fringe benefit tax. We have a similar scheme here in the UK and for a new car, it is pretty lucrative given the tax benefits. Of course, in the UK, the BIK (similar to fringe benefits tax) is based on emissions so EVs and PHEVs are particularly great deals.
Any thoughts on how some of these schemes compare to a finance directly from a dealer/manufacturer? Generally, are car leases a big thing in Australia compared to UK, via the company or not? In the last few years, I have bought used cars but previously when buying new, it was a no-brainer to go for the lease.
This basically allows me to lease a fully maintained lease car through the company and pay for it from my gross pre-tax salary and paying ~20% fringe benefit tax. We have a similar scheme here in the UK and for a new car, it is pretty lucrative given the tax benefits. Of course, in the UK, the BIK (similar to fringe benefits tax) is based on emissions so EVs and PHEVs are particularly great deals.
Any thoughts on how some of these schemes compare to a finance directly from a dealer/manufacturer? Generally, are car leases a big thing in Australia compared to UK, via the company or not? In the last few years, I have bought used cars but previously when buying new, it was a no-brainer to go for the lease.
romeodelta said:
I don't have much experience here, my ex-employer offered it but it's not really my thing.
Personal leasing doesn't seem too common in Oz - most cars are advertised with drive away prices rather than the ubiquitous £xxx per month in the UK.
On paper, seems like a good deal when buying a new car. What's the usual finance rate on a new car? I think they charge ~10% which is where they might be making their money from.Personal leasing doesn't seem too common in Oz - most cars are advertised with drive away prices rather than the ubiquitous £xxx per month in the UK.
forzaminardi said:
My employer offers it through NLC. It does seem like an attractive deal, they also package up insurance, registration and fuel. I'm tempted when it comes to our next sensible car.
Yeah, that's what makes it attractive. From what I have seen so far, the finance and insurance rates through them aren't that good and that's where you need to compare apples to apples. The calculations on their own websites need to be taken with a pinch of salt, as one would imagine. Also need to take into consideration the fringe benefits tax.custardtart said:
If you have a decent personal tax accountant it’s usually not worth Novating as they rip you on the vehicle price, lease rates plus consumables. It’s great if you can’t be arsed
How is a personal tax accountant going to get you discounts on buying and running a car? Interested to know, as the Novated Lease options I've seen look pretty competitive.Looked into novated lease for a run around like a Golf. Totally not worth it even if you are on the top tax bracket.
Spoke to my accountant and used a number of online novated lease calculators and then its a fine margin if you take a 1 year lease and buy back the car after 1 yr to keep or sell. But the cost of having longer lease like 2+ yr makes leasing much more expensive then buying it with a re-draw from your home loan including all the tax write offs, car depreciation and GST reductions etc.
Novated lease is only really good if you really want a very expensive, high depreciating car that you want to keep for 1 year. Otherwise, even man maths won't cut it.
I also looked into buying something with my company. Using the recent round of instant tax write off for companies or sole traders. Not worth it either as the ATO has recently change the tax law for vehicle related write offs. I think a lot of tradies will be caught out on this because they will have to keep log books now for work related usages and personal usage. They can only write off the work related percentage for tax and pay FBT on the remaining percentage. While previously no log book was required.
Spoke to my accountant and used a number of online novated lease calculators and then its a fine margin if you take a 1 year lease and buy back the car after 1 yr to keep or sell. But the cost of having longer lease like 2+ yr makes leasing much more expensive then buying it with a re-draw from your home loan including all the tax write offs, car depreciation and GST reductions etc.
Novated lease is only really good if you really want a very expensive, high depreciating car that you want to keep for 1 year. Otherwise, even man maths won't cut it.
I also looked into buying something with my company. Using the recent round of instant tax write off for companies or sole traders. Not worth it either as the ATO has recently change the tax law for vehicle related write offs. I think a lot of tradies will be caught out on this because they will have to keep log books now for work related usages and personal usage. They can only write off the work related percentage for tax and pay FBT on the remaining percentage. While previously no log book was required.
Edited by onny on Monday 10th May 00:08
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