[Shaneoooo]

G"day
Looks like I'm eligible for salary packaging a car. Has anyone done this before? Does it actually save much money?
I would be looking at salary packaging a new jimny. Over 2 or three years, whichever was going to help me avoid the most tax
Cheers

[GeckoXL7]

i have looked at it for my self and a my staff, turned out that the package would cost more eg equivalent to a 27% interest loan and at the end you have the option of purchasing the car or giving it back. was better to buy a car under a dealer loan which was like 4.6% at the time and salary package the loan so at the end the car is yours. One of the advantages is the salary package covered the registration, insurance, servicing and part of the fuel expenses, so pretty much treats it as a business car.

This is for me and my guys, but its kind of different for each state and field you work in. Can be good but things to look at is how much its actually costing you, what does it cover, eg payments each fortnight, month etc over the package term and see how much more it costs on top of the retail value of the car. If it covers fuel, repairs, insurance etc it can be good. But the other option if its available is a suzki dealer loan and salary package that, that's if you want to keep the car at the end

Someone here might even be a tax accountant, they should know the ins and outs lol

[Shaneoooo]

Thanks for the reply. I get the figures tomorrow for a 2 and 4 year options. The package includes insurance, rego, services, roadside assistance, and fuel. The residual value of the car for a buy back is 25% so $5000. I was told today that the loan interest rates are similar to normal car loans. I guess I will see when I get the figures tomorrow if it's really going to pay off or not.
I did not realise that you salary package a loan straight from a dealer. If the interest is not much different in the package that I have outlined I think it would be worth it to pay a bit less tax and get cheaper fuel.
Cheers

[Gwagensteve]

Yes, packaging is worthwhile.

[Jezza86]

Gwagensteve wrote:

Yes, packaging is worthwhile.

and the more you earn the better off you are

[henno]

I moved away from novated leases a few years ago due to the fact that I was travelling less and less kilometers as my role changed and this increased the FBT rate (7% turned into 26% very quickly). However, this has recently changed to a flat 20% across the board so it makes it more attractive for those not earning in the top tax bracket (although less attractive to those travelling 50,000km+). Previously, if you drove less than 15,000km in a year you were still taxed at 26% which made it unattractive to those on a lower salary.

[Shaneoooo]

Thanks for the replies guys. It turns out that because I'm employed in the public school sector and on yearly contracts I can only have a 1 year novated lease. Would still be saving money but not as much as over a few years. Bummer!

[Mike57]

Well that may not be a bad thing.

I am not sure that packaging is still an advantage. In my opinion its quite marginal and my advice would be to borrow from your home loan at the moment or if you have money in the bank just buy a car outright.

In a lease you save 10% on running costs so you need to consider what these will be BUT pay a flat rate of 20% FBT on the purchase price for the car (ex tax) for the life of the packaging deal even if re-leased. You also pay the financing costs which can be hidden in the fees and will always be higher than the bank home loan interest rates. Then you will pay fees to the finance company. You are paying all costs pre-tax so that is a benefit of up to 32.5%, 37 or 47% or so (depending upon how much you earn). It used to be worthwhile when the FBT rate was a sliding scale and if you did over 40,000km a year or at least more than 25,000km but much less attractive now.

So say you earn between $37,000 and $80,000 a year. You will save 32.5% by paying pretax for all costs including the purchase price BUT you then have to pay the 20% FBT plus the financing costs and the hidden fees.

The real trick is to select a vehicle that will retain its value and be worth more than the agreed residual at the end of the lease period. Do that right and you can win. Get it wrong (such as buying a Jimny) and you will lose any minor benefit at the end of the lease.

My last three vehicles were novated leases. I bought out the last one 4 years ago and just recently paid cash for my new car. Even though I am in a high tax bracket it was not worth leasing for me.

Anyway just my opinion.

Mike

[pete_79]

Great explanation Mike.
Personally not a fan of packaging/leasing and you've perfectly pointed out all the pit falls.


Make smart choices with your vehicles and after a few leases you can get ahead like Mike.
Make a couple of dumb choices over the years and you can quickly lose any gains.

[greenzook89]

pete_79 wrote:

Make a couple of dumb choices over the years and you can quickly lose any gains.

I know that from experience. Damn V8 Holdens.

[henno]

greenzook89 wrote:

I know that from experience. Damn V8 Holdens.

I was going to say something very similar. My two neighbours did their dough (and lots of it) after choosing to buy HSV Maloo utes, whereas I got an Aurion and my boss got two Rav4's. He and his wife did very well at the end of the lease for the Ravs.

[pete_79]

Our national sales manager loves his fully sick Clubsports.
He did OK for a few years, then the idiot bought a replica and got burnt big time. He now drives fleet cars.



I work for a pretty big company and we have a few options to negotiate with vehicles. We put a lot of km on our cars (I did 300k in 4 years in my last dual cab Hilux).
They offer us a company car of your choice (as long as it a full sized car and up to a maximum lease value depending on your position).
Or they pay a car allowance up to a maximum dollar amount. You can salary sacrifice on top of that if you like, which a couple of guys do.

I really can't understand why people chose the car allowance.
The allowance is always less then the car they want to buy.
They have to pay FBT and they're up for all tyres, maintenance and repairs.
As Mike noted you have all the leasing/loan fees and expenses to fork out, then at tax time you can claim 32-47% of those costs. You MIGHT get most of that back IF you wages have been paid correctly all year.
At the end of it they're usually left with an average car with huge mileage on it. They might make a small profit on the sale (not enough to cover the 3-4 years of running costs in my opinion). Then they have to start all over again.

I don't see the point.
I'm on my third fleet car and I love it, everything is paid for, I just get in and drive it. Then after 4 years I had the keys back and get a new one.

[pezz]

just bumping this thread back up, save starting a new one..

does anyone here have any dealings with SG fleet?
I've just started reading into novated leasing with them, (they are the only approved company work deals with)

Im looking at replacing my commuting car with a vw caddy and looking at a one or two year lease with the intension of buying it out at the end of term

id be doing 55,000kms a year

[pete_79]

I'm pretty sure my work stared with SG Fleet, but moved to FleetPlus about 8 years ago.
Our vehicles are on fully maintained leases, we all had a lot of trouble dealing with FleetPlus. They declined extra service works and stuffed us around with tires all the time.

The lease on my $38k POS Commodore was just under $1000/month.

We've just moved over to Summit Leasing this year. Can't comment on their service yet but there deals are much better.
I just took delivery of a $47k dual cab and the lease is about $600/month.

[pete_79]

Bit more feedback on Fleetplus, just in case anyone is thinking about dealing with them.

I was talking to the GM (the boss, not the company that makes shitty new cars) anyway his Ford F6 is still with Fleetplus. It's about a month or 2 out of warranty and it went in for a service yesterday. The service manager at the dealer is mates with the GM and rings him to say the F6 needs new bearings in the diff and there's an oil leak on the bottom end of the engine.
The service manager rings Fleetplus for approval to do the bearings and fix the oil leak. Declined and declined!
Now our GM has to drive his car with the noisy diff and the stink of burnt oil for the last 6 months of his lease.

He can't wait to see the last of Fleetplus.

[Jezza86]

how can you decline critical maintenance on something as serious at a diff?
if a car flips and a family burns doesn't the liability sit with Fleetplus for reckless endangerment, or can the onus be put on the driver who knew the faults existed?

[pete_79]

They're playing games, trying to get the dealer to do it as a warranty repair.

It will get fixed, but if the general manager has to go through all this crap, those of us further down the food chain have no chance.


All of this doesn't really matter if your just doing a novated lease.

But I figure it's worth noting how poorly they treat everyone (including the GM) from a company that spends about $10,000 per month in leases with them.
I would expect to be treated much worse if your just a lonely sucker with a 2 year novated lease.