Leasing.. please help! (I have no idea)

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Hi guys,

Long time reader 1st time poster

I am moving to a new job and they are offering a 15k 'car allowence' with my wage.

Now this 15k will be in the 40% tax bracket, is there any way that I can claim it all without paying tax?

I live only 3-4mins from work so I would only be doing about 15 max 20k a year, so I think that would cancel out a novated lease? :? :?

Any help would be greatly appreciated as I can't wait to sit my backside in either a new or near new Prado!!

Thanks in advance

Mick

[glipschitz Junior Member Find all posts View Profile Close glipschitz]

Hi Mick,

Welcome to the madness. Which state are you in? Can you update your profile as this helps identify where you are

With regards to leasing, there are a few ways to do it.

Novated Lease - Car is in your name and lease includes all scheduled servicing, petrol, tyres etc.

Lease - Car is in your name, and repayments are for the vehicle only with a baloon value as the residual, ie, $60,000 over 5 Years with a 30% residual.

Chattel Mortgage - This is a good way for businesses wanting to lease as they are able to claim the GST portion of the purchase back straight away, where as on a lease you can only claim the GST portion as your payments are made. A chattel mortgage is essentially a lease.

Personal Loan - Where the bank is lending you the money with the vehicle or other goods as security against the loan.

For the k's you're doing I would say that the straight lease option would be the way to go.

Rates on leases at the moment are around the 9.4 - 9.7% mark depending on who you go through. If you are getting a $15,000p.a. vehicle allowance, what you need to do is work out your costs, from what you're saying your fuel costs will be low as you work close to home, and servicing and tyres etc.

From that, work out what you can afford per month, on $60k @ 9.4% with a 30% residual you'd be looking around the $1100 per month mark and that should give you some thing to play with so you can work out what you want to do.

As your company is giving you an allowance, you avoid FBT, but remember, that keeping a log book can be handy as any extra k's above and beyond your allowance that are work related can be claimed.

I would recommend speaking to your accountant or financial planner to work out which is going to be the best way for you.

You might find that salary sacrificing your car is a good way to go as well as then your repayments are all pre-tax dollars.

Some food for thought and my 2c worth.

Cheers,

Greg