Novated Lease.

[Ford Grunt]

just a quick question im on a chattel mortgage, I own my own business, and do alot of K's a year, just wondering what would be best for me as im looking at getting a new work car at the end of the year.

Would I be better of on the chattel or moving on to something else

<{POST_SNAPBACK}>

Chattel mortgage is like a car loan, you can claim the GST on the purchase on the vehicle upfront on its purchase if your registered on a cash basis, where as to get the same benefit on a HP you would have to be registed on an accruals (ie non-cash) basis.

Given that's its your own business, you have the flexibility of financing how you want.

The GST timing of claiming is a usually a big thing for any tax clients I work on. Most want to get the GST back straight away (ie next BAS (ie GST return) so they pay cash, go car loan or chattal mortgage (if on GST registed on cash basis) or if accruals for GST, extra flexibility of choosing HP.

For leasing (including novated leases) you can only claim GST on each payment (as you dont own the vehicle - the lease company does), which will then depend on the spread of the lease term as to how long you need to wait before you have claimed all the GST back.

Read back over my post #4 regarding the flexibility of using a novated lease instead of any other form of financing but beware of the financial penalities/traps I talk about with regards to leases (including novated leases)/HPs in post #12.

Cheers,

FG

[FPV TRANNY]

Im about to lease a new bobcat and a second hand tipper.What right offs are there if I lease.Ive been told its 100% tax deductable.But whats tax deductable.

Sorry if I sound like a dumb arse but I am a dumb arse

[Ford Grunt]

NOVATED LEASE'S are not FBT exempt.. according to ATO phone call and Fleet Australia. Only company leases..

ATO  

<{POST_SNAPBACK}>

A novated lease is in principal is no different to a lease (with no novation agreement). Have a read of my paragraph 1 of post #4 in relation to this.

Anyways, the way you finance the vehicle does not change the FBT treatment.

It may mean you cannot salary package the vehicle (see again post #4) and may affect your treatment of claiming GST if its in your business (as I talk about in post #32).

You have just got a few dorks who don't know what they are talking about

Cheers,

FG

[tab]

Im about to lease a new bobcat and a second hand tipper.What right offs are there if I lease.Ive been told its 100% tax deductable.But whats tax deductable.

Sorry if I sound like a dumb arse but I am a dumb arse

<{POST_SNAPBACK}>

Love the honesty!

100% tax deductable sounds like it's come from the mouth of the person trying to sell the equipment to you. In a nutshell (albeit very brief) you can 1/11th of the payments as a GST credit, and the remainder is treated as a normal business expense.

[Ford Grunt]

Im about to lease a new bobcat and a second hand tipper.What right offs are there if I lease.Ive been told its 100% tax deductable.But whats tax deductable.

Sorry if I sound like a dumb arse but I am a dumb arse

<{POST_SNAPBACK}>

Im assuming the new bobcat/tipper will be used as part of your business (ie in generating its income) then what means is that the lease payments themselves will be fully tax deductable (ie are reduced off your income).

As opposed to when you buy it outright/chattel morgage or HP them, you claim depreciation (ie write off the cost of them over a number of years) and a proportion of the interest on the chattel morgage or HP if financied that way.

Hope this helps.

Cheers,

FG

[FPV TRANNY]

Im about to lease a new bobcat and a second hand tipper.What right offs are there if I lease.Ive been told its 100% tax deductable.But whats tax deductable.

Sorry if I sound like a dumb arse but I am a dumb arse

Im assuming the new bobcat/tipper will be used as part of your business (ie in generating its income) then what means is that the lease payments themselves will be fully tax deductable (ie are reduced off your income).

As opposed to when you buy it outright/chattel morgage or HP them, you claim depreciation (ie write off the cost of them over a number of years) and a proportion of the interest on the chattel morgage or HP if financied that way.

Hope this helps.

Cheers,

FG

Cheers mate.

What about tryes,servicing,fuel

[Ford Grunt]

Obviously tab & I were replying at the same time Your right again tab, less the GST on each lease payment.

fpvT6, read my post #32 if you want to know how GST applies.

FG

[FPV TRANNY]

Also,When you say the repayments are 100% tax deductable.Is that the tax amount on that repayment or the whole repayment for that particular month.

[tab]

Obviously tab & I were replying at the same time Your right again tab, less the GST on each lease payment.

fpvT6, read my post #32 if you want to know how GST applies.

FG

<{POST_SNAPBACK}>

Yeah sorry - I didn't realise there was a pro in the house at the time

[Ford Grunt]

What about tryes,servicing,fuel

Yep, they will all be fully deductable.

In fact, any cost providing its not a capital improvement (ie making it better than it originally was) will be fully tax deductable.

FG