novated lease/taxation question, for a dumbass
 

ok, i'm a financial/taxation dumbass, but would appreciate some advice for this hypothetical question.

if you earned 160k gross salary (not inc super) & owned your 2010 model personal car worth $30k out right, would you do a 'sale & leaseback' on it?

its like a novated lease, but for a car you allready own.

good idea or not?

If you own it outright, I can't see the point? I assume the end game is that you wanna minimise tax, I would consider negative gearing rental property personally. At least that is an asset that will appreciate.

And maybe consider consulting a financial advisor? I'm sure there are one or two here on the site......

I too don't see the point of this exercise, but best speak to a financial advisor or wait till one pops into here.

While I'm here... is your hypothetical company employing hypothetical employees now, for that kind of hypothetical gross salary? Just curious... :p

the point is to free up equity in it, i assume the finance co gives me a cheque for 30k & i spend a little on an old car & put the rest into redraw/mortgage - hypothetically

edit: sorry champ-unless you are a draftee or engineer with mining exp

But wouldn't paying back the loan on the car be higher than a similar amount loan on a mortgage.

Edit: Nevermind me, Novated lease... not a car loan :rolleyes: what do I know about finance stuff

p/s: but I am an engineer with mining exp... just curious, not really looking to move as I've just left the mining industry and started in the O&G industry.

99% sure you will need to buy another car to do this, I am the group senior business manager for the Brian Gardner group and I do this for a living!

Personally I don't like novated leases but each to their own, they are predominantly sold to government workers and people that don't know any better( don't get me wrong they work well for SOME people!)

Also ^ novated leases cost more both in fees and rate than a standard car loan! (ever tried getting out of a lease early, faaaarkin hell it costs laaaaaaarge)

[QUOTE=fatboy;648973]99% sure you will need to buy another car to do this, I am the group business manager for the Brian Gardner group and I do this for a living!

Personally I don't like novated leases but each to their own, they are predominantly sold to government workers and people that don't know any better( don't get me wrong they work well for SOME people!)

Also ^ novated leases cost more both in fees and rate than a standard car loan![/QUOTE]

Plus the balloon payment: 45% minimum for 36 months I think - that still the case? The novated lease is certainly not what it used to be, the gov have tightened things up a fair bit recently.

You'd seriously have to sit down with an advisor and do the sums mate. On face value I dont think its much of a plan, but an advisor may see it differently depending on your circumstances.

What fatty said, rule of 72 is a killer getting out of novated leases, plus FBT can be a cunt, you will need to do 25K Kms per year to minimise.
Having said all this I Novated 2 subies with good results, mainly because residual value on car was way below replacement cost ie my 06sti cost me 20K pay out and real worth then was prolly 35-40K.

I would be more inclined to look at property as effective tax minimisation in your case.

Al

PS AMD should be able to give some good advise in this area also:)

[QUOTE=fatboy;648973]99% sure you will need to buy another car to do this, I am the group senior business manager for the Brian Gardner group and I do this for a living!
[/QUOTE]

nah a 'sale & leaseback' is a pretty common thing - according to google anyway.

also i cant really see myself needing to get out of this, i plan to be with the company for a very long time

the residual, was $7k i think too btw after 5yrs
cheers

Have you crunched the numbers on both sides?

[QUOTE=stinga;648977]What fatty said, rule of 72 is a killer getting out of novated leases, plus FBT can be a cunt, you will need to do 25K Kms per [/QUOTE]

Reviewing the changes to FBT in relation to motor vehicles may cause you to re-evaluate this stance.