Some thoughts about Novated Leasing

blahblah

I am buying my new car via the salary package, have read lots of document on the web including this forum. Thanks for that. :) And here are some thoughts I have re Novated Leasing.

Firstly, I am not an accountant so this is just based on my own situation and calculation. Please correct me if I am wrong here. 

General speaking, Novated Leasing is good for everyone, at least nothing to lose during the lease. However it is subject to each person's financial situation and circumstance.

And certainly the high tax range do you belong to, the more expensive car do you want to buy, and the more do you use the car, the more benefit you will have.

Someone says that to only package the repayment of the car loan, not using the leasing company to finance the car because of the difference between interest rate. I agree that partially. In my own case, the car loan interest rate difference is less than 1% every year. Over 5 years, it may be 5%. However the leasing company source the car with 10K discount on the original price from the RRP, which is nearly 20% off. So unless you can also get such big discount, you should let the leasing company handle that for you.

However I sort of do not agree with “making money” with the Novated Leasing, since the total cost on OWNING the car, from my opinion, is pretty much the same. Even the resale price is higher than the residual value paid to the leasing company, after adding with the amount of money paid every month on the car, it is quite same result as you pay the price of car, including the interest, then sell it in second hand market after 3 or 5 years.

But novate leasing does bring the benefit, which is on the running cost of car during the leasing term. Everything you pay is from your pre-tax salary, meaning that although less salary from the employer, actually you will pay much cheaper on the bills of petrol, rego, services, insurance etc. And that is the exact reason why the higher tax range do you have, and the more do you use the car, the more benefit you can get.

So for me, Novated Leasing is just giving us a different way/option to have and own a car, especially an easier way to own an expensive car. Therefore, the base line is, before using Novated Leasing, to do your own calculation on your monthly CASHFLOW, ensuring that you can deal with the less monthly income, which the number should be still in black on the monthly balance sheet. 

netman

Thanks for sharing.

xm2w

But if your company doesn't provide salary packing, you couldn't do anything

simonwang

GST也是一个重要因素之一，如果只是一般的私人车贷，要全额交GST的。

刁馋

Just bougt a new car via novated lease and I am in charge of the salary packaging myself in the company.
Basically, Sal Pkg can help saving all the GST pmt of car related expenses and some personal income tax.
But that does not mean you can buy any car you desired. Try to keep your monthly deduction and contribution within 1/3 of your income.
Though the more your travel the more you save, but bear in mind, the general cost goes up correspondingly.
So being rational, you only buy / spend on what is necessary.

blahblah

原帖由 刁馋 于 2010-6-16 12:05 发表
Just bougt a new car via novated lease and I am in charge of the salary packaging myself in the company.
Basically, Sal Pkg can help saving all the GST pmt of car related expenses and some personal i ...

Yeah agree on that. However, still waiting for my car.

lazysnail

如果买了给家人用也可以给我退税吗？一定要新车是吗？