Anyones Passat on Novated lease?

[cru22z]

Just wondering what's it like with end of lease? Do you guys get a good deal to clear the residual or do you have to pay extra.

[blutopless2]

not sure what you mean here... are you talking about paying it out early?
if you wait till the end you pay the residual + GST. If you want to pay out early then generally you will pay a penalty for it... will depend upon how early you want to pay it off.

[cru22z]

I'm talking about after or on the end of the lease period.
I.e after 5 years.

[ganue]

I just took out a lease, 3 yrs 120000km. Residual of 15k. Projected value of car 20k.

[Darks RS]

5years with residual of $12k.

[MJW]

Mine is thorugh Orix & is a 4 year lease with residual of $19k + GST. Be mindful with the changes to FBT vs klms travelled that it is less of a benefit if you do more than 25,000 klms per year. I do approx this amount & to be honest, the benefits vs the negatives is not proving to be that attractive anymore & I will re-assess with my next car.

Novated Benefits
1. Supposed preferred pricing (I negotiated a better deal on my own)
2. Reduced insurance through my work due to being a novated lease ($600pa)
3. No GST on service, fuel, repairs etc
4. No log books required & can be used for work or personal use
5. All pre-tax funding
6. Save on GST on purchase price

Negatives
1. FBT cost per year will rise from around $8.5k pa to $12.4k based on the 25,000 pa mileage.

If your intended yearly mileage is going to be much less then I am not sure if the novated option is of benefit.

[clip]

From memory my residual around 14k. But that's 4 year lease and I never get to 4 years, so pay a small penalty, never been more than $790, so no biggie. There are a few other ways u can maximise the benefits using this type of financing too that minimises the final payout figure by using your pretax $$$.

[dopey]

5yr lease, $11k residual

Hopefully the car should be worth closer to $20k so it's not too bad

[BlackSuperb]

5yr lease, $11k residual

Hopefully the car should be worth closer to $20k so it's not too bad

Really depends on a number of things as to it being a bargain after 5 years. Whether you are on an Operating Lease or Finance Lease, what your monthly repayments are for 5 years/the interest rate the lease company charges and how many new tyres are included for the duration. (I haven't managed to get my lease company to disclose what the interest rate is after 3 leases so far.) The government takes their share in the form of 20% FBT which lessens the desirability of salary sacrificing a lease as well.

[passatpout]

Mine is thorugh Orix & is a 4 year lease with residual of $19k + GST. Be mindful with the changes to FBT vs klms travelled that it is less of a benefit if you do more than 25,000 klms per year. I do approx this amount & to be honest, the benefits vs the negatives is not proving to be that attractive anymore & I will re-assess with my next car.

Novated Benefits
1. Supposed preferred pricing (I negotiated a better deal on my own)
2. Reduced insurance through my work due to being a novated lease ($600pa)
3. No GST on service, fuel, repairs etc
4. No log books required & can be used for work or personal use
5. All pre-tax funding
6. Save on GST on purchase price

Negatives
1. FBT cost per year will rise from around $8.5k pa to $12.4k based on the 25,000 pa mileage.

If your intended yearly mileage is going to be much less then I am not sure if the novated option is of benefit.

Did you look at the employee contribution method? Where you make a post-tax payment equivalent to theFBT amount, reducing FBT liability to nil? My two employers when I had mine under lease both recommended doing this - although I wouldn't be surprised if this is no longer allowable. I'm not sure, since I bought mine outright about 18 months ago, because I didn't think leases were worth it then, and still don't (other than allowing better finance options when a car is new....).

[macdub]

Did you look at the employee contribution method? Where you make a post-tax payment equivalent to theFBT amount, reducing FBT liability to nil? My two employers when I had mine under lease both recommended doing this - although I wouldn't be surprised if this is no longer allowable. I'm not sure, since I bought mine outright about 18 months ago, because I didn't think leases were worth it then, and still don't (other than allowing better finance options when a car is new....).

I have currently lease on ECM method where I make pre tax and post tax contribution to nullify the FBT liability.

[cru22z]

I have about 30% on post tax payment.
My residual would be 14k by 2017. That makes my
MY12.5 about 6 years old. I'm hoping to break-even if I
run it to the 5 years term.

[MJW]

What is the advantage of paying the FBT liability post tax when I currently pay it pre-tax to reduce my taxable income?

Did you look at the employee contribution method? Where you make a post-tax payment equivalent to theFBT amount, reducing FBT liability to nil? My two employers when I had mine under lease both recommended doing this - although I wouldn't be surprised if this is no longer allowable. I'm not sure, since I bought mine outright about 18 months ago, because I didn't think leases were worth it then, and still don't (other than allowing better finance options when a car is new....).

[passatpout]

Because, unless you earn in the top marginal tax bracket, the total tax liability is less.. IIRC 30% compared to about 47%..your choice, you'd need to look at your own circumstances and work out whether it's worth it or not. In my case, it was - about $2000 annually, from memory..

[Marakai]

Been reading this thread with great interest as I'm kinda facing that decision.

I hate having car payments for longer than necessary, hate paying interest - but hate paying more taxes than I need to even more.

Yet, the whole novated lease complex just leaves me scratching my head. Because it seems you can't actually get at the meat of the underlying math. Oh yeah, there's all these wonderful "novated leasing calculators" and lo and behold not matter what I seem to type into there it always looks like I'd "save money/taxes". But compared to what? I'm too much of a math/science geek to not ask "what are your formulas and what data are you precisely using?" and the leasing companies never seem to come through with that.

I've created my own spreadsheet into which I punched all sorts of comparisons: outright cash, various combinations of finacing (different down payments, different run-times), adding running costs for the vehicle and then tried to reverse engineer the novated lease calculations based on what I found from the ATO.

Even at my salary range (which is now very near the top tax threshold, curse you, ATO ) I just can't seem to make these numbers come out such that I *really* end up with an advantage.

This whole thing just seems like such a... I dunno, ... scam! Maybe I'm overlooking something and would love enlightenment, but at this moment it looks like it's just a shell game which allows people to drive more car than they could normally afford. Especially if you go by the "well I'll always have a car payment one way or the other" anyway.

What am I missing?

At this moment it looks like the best combo is to make a decent (30%) down payment, then finance for 3 years and then be done with it. Overall interest remains minimal that way, I don't tie up too much cash that I could otherwise invest of have work for me and I don't spend years making car payments. But there's nothing from the ATO that way. That irks.