Salary Packaging, Novated Leases & Toyota Finance

[k_sheep]

Yeah our financial planner is tearing his hair out because we're terrible at finance and hate risks! Consequently we have cash and our house and that's about it!

My 8yo base model Mazda will do me for another decade I suspect!

 

[andye]

Agree with cove re ego It is quite possible to novated lease a second hand car if it is not too old

 

[Dr Ralph]

Agree with cove re ego It is quite possible to novated lease a second hand car if it is not too old

This is true, but there is MUCH better value for a new car.

 

[JessicaTam]

Agree with cove re ego It is quite possible to novated lease a second hand car if it is not too old

Agreed. My most recent lease was a two year old Pajero.

 

[greenfish]

This is true, but there is MUCH better value for a new car.

I disagree.

In my view you are much better off novating a second hand car. The reason is that you are allowed exactly the same depreciation as a new car(!), and the ECM for FBT is based on the purchase price of the car - the lower this is, the lower the post-tax employee contribution required to offset any FBT.

Not to mention you borrow less, so your interest costs will be lower.

 

[exceladdict]

I disagree.

In my view you are much better off novating a second hand car. The reason is that you are allowed exactly the same depreciation as a new car(!), and the ECM for FBT is based on the purchase price of the car - the lower this is, the lower the post-tax employee contribution required to offset any FBT.

Not to mention you borrow less, so your interest costs will be lower.

One consideration is the ability to claim GST back, if not bought from a dealer

 

[greenfish]

One consideration is the ability to claim GST back, if not bought from a dealer

Yes, good point, make sure you're buying a vehicle from a source that can provide the lease company with a Tax Invoice showing the GST component. My current novated lease vehicle came from an auction company and I confirmed the vehicle was GST eligible prior to bidding.

 

[Dr Ralph]

One consideration is the ability to claim GST back, if not bought from a dealer

Exactly. This is a very large sum on a new car.

 

[Dr Ralph]

I disagree.

In my view you are much better off novating a second hand car. The reason is that you are allowed exactly the same depreciation as a new car(!), and the ECM for FBT is based on the purchase price of the car - the lower this is, the lower the post-tax employee contribution required to offset any FBT.

Not to mention you borrow less, so your interest costs will be lower.

You might want to speak with an accountant about this.

 

[greenfish]

You might want to speak with an accountant about this.

I did. You might want to check with yours

 

[greenfish]

Exactly. This is a very large sum on a new car.

Which is reclaimable on a second hand car - if purchased from a lease company / dealer / some vehicles at auction..

 

[Dr Ralph]

Which is reclaimable on a second hand car - if purchased from a lease company / dealer / some vehicles at auction..

Sorry, but this makes no sense.

 

[Dr Ralph]

I did. You might want to check with yours

And you might want to get another opinion.

 

[smckay]

Sorry, but this makes no sense.

GST is inclusive on any vehicle when you buy from a GST-registered seller. So all dealers and auction joints will have a tax invoice with a GST component. However, charities can and do sell cars exclusive of GST so as greenfish stated, make sure if at auction there is GST included in the price.

The cheaper you buy it the less FBT you are liable for so it does make sense to buy a used or demonstrator car.

Any companies told you novated people that you have to pay the GST on the sale of the car your are leasing? Government doesn't let you get away with anything you know.

Best way to buy a new car? Stick it on your mortgage, you will never get any sort of loan at ~4% for a set of wheels. Or drive a clunker and make them wonder if you really have money or not.

 

[greenfish]

And you might want to get another opinion.

I'm also with NLC and am happy to share my novated lease figures with you.

I have reclaimed the GST (via NLC) on the second hand vehicle I have novated.

Depreciation on a second hand car that is "new" to me, is the same as on a brand new car that I acquire - please feel free to check with NLC.

My post tax contribution is based on the purchase price of the car.

Would you mind explaining where you think NLC and I have it wrong?

 

[cove]

NAB have been winning our 36 month car Hire Purchase business at rates quite a bit under 5% effective. They have been beating our Bank often by 0.5%.
We would never put a car on a 30 year mortgage as cars depreciate and we wear them out in 3 to 5 years.
Now how is your ego going?
Actually I have never bought a new car...I just get them 2 years old. Mrscove does love a new car and has had several. They become second hand as you leave the showroom.

 

[knasty]

I'm also with NLC and am happy to share my novated lease figures with you.

I have reclaimed the GST (via NLC) on the second hand vehicle I have novated.

Depreciation on a second hand car that is "new" to me, is the same as on a brand new car that I acquire - please feel free to check with NLC.

My post tax contribution is based on the purchase price of the car.

Would you mind explaining where you think NLC and I have it wrong?

Indeed I have done the same. I do rolling one year leases on the same vehicle which allows 35% depreciation per annum, hence a very small residual and maximises the pre-tax deduction. Also means more flexibility as you're not locked in long term. My consultant confirmed that's what they do themselves. The (small) offsets to the saving is typically higher short term interest rate and annual lease fee of around $200.

 

[PLANT]

What you buying second hand cove?

 

[hossein_au]

Indeed I have done the same. I do rolling one year leases on the same vehicle which allows 35% depreciation per annum, hence a very small residual and maximises the pre-tax deduction. Also means more flexibility as you're not locked in long term. My consultant confirmed that's what they do themselves. The (small) offsets to the saving is typically higher short term interest rate and annual lease fee of around $200.

I am keen to know more. Who are you with?

 

[knasty]

I am keen to know more. Who are you with?

Nlc. I originally went with 1 year term to test them out without being hooked for too long as I viewed them as sharks (this hasn't changed but I am a captive as its my only choice at work). I didn't think it would be worthwhile rolling into a second year as I expected depreciation in year 2 to be that of a 2 year lease (45%) minus that of the 1 year already taken (35%) , but they confirmed each lease is viewed as new hence full depreciation, albeit your fbt cost base always remains the same. I'm on to my 7th and 8th leases with them and whilst I hate going through the process each year its worth the saving.