Both include fuel and etag paid for..
Which is the better option? I’ve previously taken the company car but feel I could be in front after around 2 years if I bought a second hand $20k vehicle with the allowance?
$20k Car Allowance or $50k Company Car?
LCheapE on 23/01/2019 - 21:56
Comments
Allowing $5 for above, then $7k in tax, it still leaves an extra $8k p/yr?
$7k sounds high, but a safe assessment. Your tax will vary depending how you want to cut the depreciation on the car (and how long you actually intend to keep it/sell it for).
Any choice of Company Car or are you limited to set choices of fleet vehicles? What are the restrictions/limitations and consequences if you left the company in a year's time? How many years lease till you get to renew it?
Any choice of company car with no restrictions or limitations.
If I went the allowance option, I would buy the car outright. Whenever I decided to leave the company, I would own it.
If I went the allowance option, I would buy the car outright. Whenever I decided to leave the company, I would own it.
This is a big one for me. I had a company car at a previous job. Whenever pay rates came up for discussion they’d point out the car being worth $15k per year. When I left I had nothing to show for it. If I had put $-5k per year towards a Carolyn own I would have had a car to show for it and not had to spend extra on a car after leaving.
Buy a $20k camry.
$50k company car
Take the allowance.
Just ensure you prepare yourself for tax time if you don’t have equal car expenses to offset the $20k. Often allowances are not tax deducted (withholding tax) by the employer. Can sometimes leave unsuspecting inidividuals with a large tax bill come tax time as they have spent the cash on other things but not actually incurred an equal deduction for running the car, and the remainder just forms part of your accessible income.
Thanks. Appreciate the advice
Welcome.
May just add, whilst you wanting to save the extra money - I think the employer will have a reasonable expectation that you have a vehicle that is reliable and fit for purpose. So if buying second hand, make sure you making the right checks and balances as you may come unstuck if you have continuous car issues as a result of being “cheap”, of which ould have unnecessary consequences on your employment as it is a paid allowance.
Assuming the $20k is an annual allowance, you could perhaps get a car on a novated lease with minimal balloon payment (and package minimal fuel costs since your company will be paying fuel costs). Try work it so that the lesse period is in line with how long you intend to stay at the company.
That'll mean you get the car you want straightaway and you will be using the $20k effectively tax-wise.
Ask your accountant.
$20k sounds good. you could get a slightly used cx5 or something that should be pretty nice to get around in, and then the second year is all profit
also less stress about messing the car up or anything. an inexpensive car that you own and feels almost free is something you could relax in quite easily and treat like a workhorse, while i imagine a nice new $50k company car would cause undue stress if your friends or family ever wear muddy shoes or something
Factor in rego, tyres, insurance, servicing too