Novated Lease Vs Company Car

LJaz82a on 16/05/2020 - 15:08

Hi I earn a high income (180k) and additionally provided company car fully maintained up to value of $60k turned over every few years. I discussed with accountant what is the best option to enable me to reduce tax and also look to potentially buy the car at some stage.

Was suggested to go with novated lease.

Interested in if this is actually the better option given the current arrangement works quite well; and under the lease it obviously costs me money.

Perhaps I can negotiate for increase in salary to offset novated lease payments?

Automotive

Comments

  • brendanm on 16/05/2020 - 15:12
    +9

    Why would you want to pay for a car when you get one already? You don't magically get back all the money you spend on the car come tax time.

  • Stewardo on 16/05/2020 - 15:18
    +2

    Use the company car, invest the high income while still young. When your old and have income generating assets, buy a silly expensive car.

  • Jaz82a on 16/05/2020 - 15:29

    Thinking more I get increase of salary in pocket and get novated lease with that and option to buy at end. Also then if I changed jobs I keep car

  • Seraphin7 on 16/05/2020 - 15:34
    +1

    Does your employer allow you to take the $60k car allowance as additional salary? Or is a "use it or lose it" arrangement?

    • Jaz82a on 16/05/2020 - 15:42

      I could ask for $15k increase for instance. Potentially that’s what I’m considering so essentially I am on same deal except also becomes tax deduction

      • LeoDMD on 16/05/2020 - 16:59

        for that 15k increase you'll pay 45% tax …

      • Seraphin7 on 16/05/2020 - 19:17

        Frankly I'd rather the current arrangement. If someone's giving me $60k a year worth of car, I've got a better lifestyle than one with $15k more salary that I'm intending to use 100% on a car.

        • Jaz82a on 17/05/2020 - 13:35

          Well it’s not 60k worth of car..

  • wordplay on 16/05/2020 - 15:36
    +1

    So work pays for car, services, fuel, maintenance and you are somehow better off financially if you take on these costs??
    I have a work vehicle and would be interested to figure out how this works (i don't earn a high income like you though)

    can you just purchase the car at change over time if you need 2 cars for some reason (or are you not allowed to use work car for personal journeys?)

    • Jaz82a on 16/05/2020 - 15:53

      Would like to have car an asset rather than the current arrangement

      • apsilon on 16/05/2020 - 16:05
        +1

        Unless you're buying something rare and/or collectable a car isn't an asset. You need to do the math and decide for yourself which option is better but personally I'd take the company car no question.

        • Jaz82a on 16/05/2020 - 16:11

          Work spending $60k + runnings costs or giving me funds to get my own car. Owning a car is more of an asset than owning no car.

          • brendanm on 16/05/2020 - 17:03
            +1

            @Jaz82a: They aren't just going to give you the same amount of money. The car will be a tax break for them more than likely.

  • Mechz on 16/05/2020 - 15:40
    +1

    Definitely keep the company car, not only will you save money but also the headache of paperwork and claiming fuel and km expenses which all need to be documented. Spend the money on negative gearing instead.

  • MS Paint on 16/05/2020 - 15:50
    +8

    Potentially cheap C43 available. Interested?

    • Kangal on 16/05/2020 - 16:56

      You're on a roll lately.
      I especially like your artwork from the multiple traffic incident threads ; )

  • Euphemistic on 16/05/2020 - 15:56

    The only thing I can mention is that while the company owns the car you’ll be stuck without if you leave them - ie nothing at the end. But having a fully maintained car that is turned over every few years is good while it lasts.

    I was told for years that my company car was worth $15k per year to me. Pretty sure if I had spent $15k per year on a vehicle For the time I was there I would have had a pretty decent car when I left, but I got nothing.

    All the guys retiring from my previous workplace had to buy cars when they retired. Some handed their cars back 12-18mths before retiring to ‘save up’ for it so they didn’t have to pay the lease allowance for private use they’d been paying for years.

    Yes negotiate a pay increase, or car allowance, if you hands back the car.

    • Jaz82a on 16/05/2020 - 15:58

      Yes that’s what I’m thinking is best way of leveraging that , so I can have a benefit/vehicle

    • nephilim on 16/05/2020 - 16:11
      +3

      Not sure why worried may not have a car? Hes making 180,000 a year, he can afford a $600 magna on gumtree if fired tomorrow.

      • JIMB0 on 16/05/2020 - 18:26

        I'd be doing that now and pocketing the $60k a year if I was the OP.

        • Jaz82a on 16/05/2020 - 19:27

          It’s not 60k/yr. 60k car replaced 3yrs and running cost.

          • [Deactivated] on 16/05/2020 - 22:57

            @Jaz82a: What car are you driving?

      • Euphemistic on 16/05/2020 - 19:35

        Yeah making enough, but it’s a consideration to make. When I had he company car I could afford to buy a car when leaving, but it means you may need to consider having enough funds before quitting.

  • thatonethere on 16/05/2020 - 15:58
    +1

    I'd go the work car. We used to have them and it was great as it wasn't your problem for any costs. Sadly I knew it was too good to last and they got rid of that option last year so it is novated only.

    The drawback was the daggy car catalogue. Eg Holdens.

  • resubaehtgnolhcs on 16/05/2020 - 16:33
    +4

    Why take the word of an accountant (who one would assume knows all your finances/circumstance), when you can ask randoms on the interwebs!

    • coin saver on 16/05/2020 - 16:59

      Because the accountant will come back with stop talking S..t and give me the facts
      .

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