Novated Lease.

[Grass]

Hi Ben,

thanks for all the good oil on the novated leasing/FBT thing. I have a question for you. I will be novating 2 cars within the next 2 months. Both over 12 months, 25000k's/yr. This will bring my gross salary down considerably. My question, does novating increase my eligibility for the Family Tax Benefit A and B or is this canceled out based on FBT values. Not sure how it works in this regard and other similar type allowances etc.

Any info appreciated.

Hey mate,

The short answer is maybe

Based on your example about your looking at packaging two cars with more 25,000 klms say they cost $20,000 & $25,000 each (incl GST).

FBT on the statutory method would be $2,200 + $2,750 ($20,000 x 11% + $25,000 x 11%) respectively totally $4,950 per annum

this amount of $4,950 is the amount used for the FTB, so if your salary sacrifice is more than this amount you will be infront.

Hope this helps.

Cheer,

Ford Grunt (Ben)

Are you sure that the FBT payable is the $4,950 per annum ?

Our Financial Controller keeps telling me it is the "grossed" up amount that has to be payed. ?

[Grass]

As long as you make the minimum kms, I have found it ok, but it is also expensive for someone on my humble wage.

There's a couple of 'if's'

If you were planning to buy a new car anyway, and

If you can do at least 25,000km per year, and

If you don't want to modify the car, and

If the Novated Lease covers all car expenses -

Then do it, it will save you heaps of money. If any of the above criteria are not met, think twice.

Personally, I love it because I am forced to do the km's (going on holidays more often, XR Club cruises etc)

Panda

BTW, it is not just for the high fliers.......this I know for sure.

With the new Tax rates introduced, it is no where near as attractive as it was, unless you work for a company that has an FBT reduction - It's not an exemption, cause they can only exempt up to $15,000 per year.

[Falchoon]

You dont pay both LCT and GST, LCT only once above the threshold.

Not sure if that is correct. See quote below from ATO website.

Luxury car tax applies to luxury cars in addition to any GST payable on the cars and uses the same framework as the GST.

Link to LCT info on ATO website

Buy a Tornado or Pursuit and you don't pay LCT!

Best to buy accessories such as tint, headlamp protectors etc after you take delivery of the car otherwise you pay 25% more for them once the value of the vehicle exceeds $55,134.

<{POST_SNAPBACK}>

Poor Ross, as always behind the times....

The luxury car tax threshold for the 2000-2001 financial year is $55 134.

....for the 2004-2005 financial year $57,009

<{POST_SNAPBACK}>

Yeh you got me there Alex, I thought that figure might of been out of date but I only had a quick skim read through the ATO site. There is so much irrelevant and long-winded BS on there I CBF reading it all properly. Dunno why they still have 00/01 figures on there for.

[Antisocial]

Yes Ross the ATO takes my award for the Most Piss Poor Website in existance.

Took me ages to find it and I knew what I was looking for....like you say chock full of outdated crap.

But I HAD to keep looking, the though of showing you up was far too strong to resist.

[Eugene]

Communists I tell you. Hit high tax payers with more tax just because they work hard!!!

<{POST_SNAPBACK}>

Tell me about it, over $40,000. in income tax last year, and Ihave not used medicare or the PBS, I have NEVER been on the Dole or SS, My wife doesnt claim jack for her or our three kids, the only thing I have ever got from the Govt is the $3000. baby bonus.

I have paid about $500k in income tax in the last 15 years and have got SFA for it, no wonder people try thier hardest to avoid tax and will go to any lenght to get out of paying it.

[Buf-Phoon]

Luxury car tax is build into the price when its sold. so there are no hidden costs unless you get options on top.

The only catch is you can't claim for depreciation until it goes under 57k.

Communists I tell you. Hit high tax payers with more tax just because they work hard!!!

<{POST_SNAPBACK}>

Daniel .... I echo your sentiments , but dont start me up on this . Would require a whole new thread. Wouldn't it Comrade Lumper?

[sixfan]

Communists I tell you. Hit high tax payers with more tax just because they work hard!!!

Tell me about it, over $40,000. in income tax last year, and Ihave not used medicare or the PBS, I have NEVER been on the Dole or SS, My wife doesnt claim jack for her or our three kids, the only thing I have ever got from the Govt is the $3000. baby bonus.

I have paid about $500k in income tax in the last 15 years and have got SFA for it, no wonder people try thier hardest to avoid tax and will go to any lenght to get out of paying it.

lets start a thread, Oh please lets start a thread.....

[Lumpen]

Daniel .... I echo your sentiments , but dont start me up on this . Would require a whole new thread. Wouldn't it Comrade Lumper?

No, I agree wholeheartedly Julian...

I know if I paid tax I'd be pissed off too

Lumpy

[tab]

I know if I paid tax I'd be pissed off too

<{POST_SNAPBACK}>

Parasite

[Ford Grunt]

Hi Ford Grunt.

I'm about to novate a ute, but was planning to sell the old one. Now if I keep the old one for the first year of the lease and claim 0% FBT, do you think that I would be able to change that when I sell the old one and start using the leased vehicle for personal use other than travelling to and from work?

Cheers.

<{POST_SNAPBACK}>

If I pick up correctly on what you are asking you want to:

1/ Buy a new ute plus keep the old one and claim the FBT exemption on the new ute only.

2/ After one year sell the old ute and stop claiming the FBT exemption on the new ute.

Short answer to 1 & 2 is yes you can do both of these, however note the weight restrictions I talk about later.

In 1/ you can claim the exemption on the new ute provided you keep the private use to "minor, infrequent and irregular" private travel. I guess, you will be using the old ute for the majority of the your private travel and will basicially then restrict the use of the new ute to to & from work.

Another issue is (not sure of your circumstances ie. whether you are already salary sacrificing your old ute but..) you more than likely will be up for FBT on the old ute as you wont be claiming an FBT exemption on the old one.

In 2/ if you start using the ute privately then as long as the ute is NOT a one-tonner, the FBT will be calculated as a CAR BENEFIT and not a fbt exempt vehicle and as such to from work travel will no longer be business klms.

If the new ute is a one tonner it will treated as an RESIDUAL BENEFIT meaning that it will be taxed on a harch flat cents per klms rate of 44c per klm (for each private klm travelled) or based on total operating costs less reductions for business klms.

Hope this is clear enough.

Cheers,

Ford Grunt (Ben).