AJ235 Posted July 2, 2015 Share Posted July 2, 2015 Hi all, I'm just wondering what peoples thoughts/experience are with a notated lease through your employer? I have a car on finance and I have received a few quotes about changing this to a notated lease instead. When I do the math, it seems better to go with the notated lease, everything is included and I save some money on tax. I will eventually own the car as there is a balloon payment at the end of the 2 year lease. Any advice or things I should look into first? Many thanks Link to comment Share on other sites More sharing options...
Peach Posted July 2, 2015 Share Posted July 2, 2015 Personally I find novated leases a really expensive way of doing things. I spent $18K on a secondhand car, leased over three years it costs me approx $800 a month when you add up the pre, post and fringe benefit tax costs and at the end of it I have a balloon payment of $11k. So out of the $30K it will cost me over the lease, $23K is eaten by charges to run the vehicle. Link to comment Share on other sites More sharing options...
Eera Posted July 3, 2015 Share Posted July 3, 2015 On my third lease at the moment. I don't think you particularly save a lot on them; I worked it out at being about $2k per year, but what I do like about them is that you never get stuck with unforseen bills and things like rego that you forgot about. f you pick a car that doesn't depreciate a lot you also get a nice payment at the end of the lease. My Prado costs about $800 per month out of pocket fully services, fully fueled up (based on 30,000km per year), and our balloon payment is $23k, the dealer has offered $38k for it at end of lease and as we are taking on a new one that's basically money on the pocket as far as we are concerned. We also have a Colorado on lease which is FBT free as a commercial vehicle (though I think they've changed that recently). It costs me $7k per year out of pocket Link to comment Share on other sites More sharing options...
flybyknight Posted July 3, 2015 Share Posted July 3, 2015 i had the option of novating, i chose not to as the interest on the loan would be front loaded, and if i changed employer i would have to refinance! it would mean i'd never pay the damn thing off! check all the fine print if you decide to. Link to comment Share on other sites More sharing options...
Peach Posted July 3, 2015 Share Posted July 3, 2015 My Prado costs about $800 per month out of pocket fully services, fully fueled up (based on 30,000km per year), and our balloon payment is $23k, the dealer has offered $38k for it at end of lease and as we are taking on a new one that's basically money on the pocket as far as we are concerned. Using an online calculator I can't get less than double that cost ? http://www.sgfleet.com/au/salary-packaging/novated-lease-calculator/ Link to comment Share on other sites More sharing options...
AJ235 Posted July 3, 2015 Author Share Posted July 3, 2015 Thanks everyone for your comments. I currently pay $685 on just the finance payment per month and that has just under 3 years left. I have been quoted $754 for a fully maintained lease for 2 years with a balloon payment of $9000. I have also just gone up one tax bracket so with some of the payment coming out pre-tax it should drop me a tax bracket again. I am inclined to think that this is worth doing but perhaps I should get some financial advice to make sure. Link to comment Share on other sites More sharing options...
Peach Posted July 3, 2015 Share Posted July 3, 2015 Fag packet calculation time: $685 * 30 months = $20K to own the car outright or $754 * 24 months+ $9K balloon = $27K to own car outright + have it serviced + fuel in the meantime. The question is will you spend $6.5K on feeding and watering the car over 24 months. I would guess the fleet company thinks not... and that's where they make their money. Most of any tax I saved gets spent on the post tax component.. So was difficult to see a saving as your overall income goes down. Link to comment Share on other sites More sharing options...
Bungo Posted July 3, 2015 Share Posted July 3, 2015 Can you do this after the fact anyway? i.e. OP already has bought the car. Link to comment Share on other sites More sharing options...
AJ235 Posted July 3, 2015 Author Share Posted July 3, 2015 Hi Peach, I think close to it, yes. I spend at least $200 per month on fuel and the quote also includes comprehensive insurance for a multicar policy with my husband and his car (i source the insurance myself as it was cheaper than they quoted and they just included this). Also registration which is $700 per year. I'm seeing my tax agent next week for end of tax return so I may ask him then! Hi Bungo - yes you can do it on a new or used car that is over $10,000. They pay the finance remaining on the car and you effectively pay that amount to them in the lease agreement. Link to comment Share on other sites More sharing options...
Eera Posted July 3, 2015 Share Posted July 3, 2015 Using an online calculator I can't get less than double that cost ? http://www.sgfleet.com/au/salary-packaging/novated-lease-calculator/ Different providers have different amounts, and different deals with companies; ours comes via an international mining company who have fleet deals etc and the buying power to get cheaper rates. Also ours would be based on costs calculated nearly four years ago and we have to renegotiate early next year. I have no idea what we'll be looking at then, I hope it's not double... Regardless though, if the numbers are crunched and end up favourable, even by a couple of hundred, we'll still do it. Link to comment Share on other sites More sharing options...
Peach Posted July 3, 2015 Share Posted July 3, 2015 Different providers have different amounts, and different deals with companies; ours comes via an international mining company who have fleet deals etc and the buying power to get cheaper rates. Also ours would be based on costs calculated nearly four years ago and we have to renegotiate early next year. I have no idea what we'll be looking at then, I hope it's not double... Regardless though, if the numbers are crunched and end up favourable, even by a couple of hundred, we'll still do it. I work for a company of 350,000 worldwide - I'd hope we'd get fleet deals too. I so want you to be right, I'd go out and get a Prado in a heartbeat for that money. Link to comment Share on other sites More sharing options...
Peach Posted July 3, 2015 Share Posted July 3, 2015 With some random numbers put in. Even over the $158k tax threshold it only drops $20 a week. Link to comment Share on other sites More sharing options...
Peach Posted July 3, 2015 Share Posted July 3, 2015 Hi Peach, I think close to it, yes. I spend at least $200 per month on fuel and the quote also includes comprehensive insurance for a multicar policy with my husband and his car (i source the insurance myself as it was cheaper than they quoted and they just included this). Also registration which is $700 per year. I'm seeing my tax agent next week for end of tax return so I may ask him then! Hi Bungo - yes you can do it on a new or used car that is over $10,000. They pay the finance remaining on the car and you effectively pay that amount to them in the lease agreement. Something to be wary of is that if they get the sums wrong, it is you that has to pay for the mistake. For example, if the fuel price goes up and you spend more than estimated you have to pay the shortfall. Or if the car needs to go to the garage - other than a normal service - that won't be budgeted for and comes out of your pocket. I personally think they underquote deliberately to attract you to the deal, but once you sign there is no way out other than pay the full lease value. Link to comment Share on other sites More sharing options...
icko Posted September 17, 2015 Share Posted September 17, 2015 Hi Guys, Thinking about Novated at the moment, and this thread is being quite useful. Regarding the difference you mentioned, it was my understanding that the money you give them is kinda like an account that you use to pay the car related expenses. Hence, at the end of the lease if there is some leftover, it comes back to you (less the taxes)... Am I wrong? Fag packet calculation time: $685 * 30 months = $20K to own the car outright or $754 * 24 months+ $9K balloon = $27K to own car outright + have it serviced + fuel in the meantime. The question is will you spend $6.5K on feeding and watering the car over 24 months. I would guess the fleet company thinks not... and that's where they make their money. Most of any tax I saved gets spent on the post tax component.. So was difficult to see a saving as your overall income goes down. Link to comment Share on other sites More sharing options...
Marisawright Posted September 17, 2015 Share Posted September 17, 2015 Hi Guys, Thinking about Novated at the moment, and this thread is being quite useful. Regarding the difference you mentioned, it was my understanding that the money you give them is kinda like an account that you use to pay the car related expenses. Hence, at the end of the lease if there is some leftover, it comes back to you (less the taxes)... Am I wrong? Firstly there are different kinds of novated leases so check the details of the one you're offered. I had a novated lease and it didn't cover fuel, for instance. The big advantage of a novated lease is that it comes out of your salary BEFORE tax, so it reduces your taxable salary, and therefore you pay less tax. You have to look at your tax situation and decide whether the tax saved is more than the extra money you spend on leasing. Personally, I would've been better off NOT having a novated lease (I got it as part of a job offer on joining the company and didn't know any better!). It was nice having a brand new car and not having to worry about servicing etc - but if I hadn't taken the lease, I would've bought a much cheaper second-hand car. Also I had low mileage, and that makes a difference in Australia to how much fringe benefits is payable. Link to comment Share on other sites More sharing options...
dmjg Posted September 18, 2015 Share Posted September 18, 2015 Firstly there are different kinds of novated leases so check the details of the one you're offered. I had a novated lease and it didn't cover fuel, for instance. The big advantage of a novated lease is that it comes out of your salary BEFORE tax, so it reduces your taxable salary, and therefore you pay less tax. You have to look at your tax situation and decide whether the tax saved is more than the extra money you spend on leasing. Personally, I would've been better off NOT having a novated lease (I got it as part of a job offer on joining the company and didn't know any better!). It was nice having a brand new car and not having to worry about servicing etc - but if I hadn't taken the lease, I would've bought a much cheaper second-hand car. Also I had low mileage, and that makes a difference in Australia to how much fringe benefits is payable. they have just changed the rules to remove the minimum km clause, its now zero (as i was told at a salary packaging meeting two weeks ago) we are still thinking about the sums. I can lease a vehicle until it is 8 years old. Link to comment Share on other sites More sharing options...
Sandra Szondi Posted November 2, 2015 Share Posted November 2, 2015 Hi guys, Reading through this thread, there seem to be a few misunderstandings so below you'll find some FAQ's: How is my FBT calculated? FBT is now a fixed 20% and is set by the ATO. It is calculated as follows: ($30,000 {FBT Base value} x 20% {Statutory Method Percentage} – $0 {Post Tax Contributions ECM}) x 365 {number of days held/in FBT year} x 47% {FBT Rate} x 2.0802 {Gross up Factor} = $5,866.16 FBT payable What is included in Novated Lease? It depends whether you have a Fully Maintained/Budgeted or a Non-Budgeted/Non-Maintained StreetFleet lease. The difference is that under a Fully Maintained/Budgeted Lease you simply pay the monthly lease payment which includes the budgeted maintenance. These maintenance provision amounts are disclosed and regularly reconciled with actual expenditure. Budgets can be increased to cover higher than expected costs. However, if the amount spent is less than budgeted this will be refunded at the lease’s completion. All vehicle running costs can also be included in the lease rental and paid for with pre-tax income. You can include: • Service / Maintenance • Replacement tyres • Fuel • Registration renewals • Insurances You can choose what you include and how much budget you want to allocate. Residual value? There is always a Residual Value (RV) payable at the end of the lease term. Residual values are set by the Australian Tax Office (ATO), which has published guidelines for minimum residual value percentages of the vehicle acquisition cost. Hope this helps. Link to comment Share on other sites More sharing options...
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