Novated Lease Used Tesla Benefits?

RobotWizard on 18/07/2024 - 15:33
Last edited 18/07/2024 - 15:58 by 1 other user

Hey everyone, I really tried searching, reading and using all these online Novated Lease calculators but I still can't get my head around it.

I have recently purchased 2021 Tesla Model 3 for $33K Cash and got me thinking if I should've just gone with Novated Lease? Do you know how much benefit or not it will have for me on $107K Per Year income before tax?

I still haven't transferred the car into my name and can probably work something out with seller still, but just seeing if it's worth the hassle?

Thank you.

Financial Car Electric Vehicle Novated Lease Tesla Inc

Comments

  • Gdsamp on 18/07/2024 - 15:35
    +26

    I have recently purchased 2021 Tesla Model 3 for $33K Cash and got me thinking if I should've just gone with Novated Lease

    Just enjoy the car; you have already bought it so make peace with the cash payment

    • RobotWizard on 18/07/2024 - 17:16
      +1

      Thanks man, that's a fair point, I honestly didn't even think about this till one of my friends saw the car and told me it wasn't a good move to buy it off cash.

    • WilliamDGH on 19/07/2024 - 10:54
      +2

      Op could do a lease back, it's basically "selling" the car to the lease company, and then lease it from them. You receive your cash back and just pay the lease fee etc…

    • HeWhoKnows on 19/07/2024 - 15:16
      +1

      Agreed

      Its a done deal so stop thinking about it.

      Im not even sure it would be an option for a used 2021 vehicle if purchased privately.
      Even used car dealers might not entertain it.
      They usually want you to use thier finance so they can make a huge commission on that too.

      You can still claim all motor vehicle costs for work use including depreciation!

  • Fredfloresjr on 18/07/2024 - 15:45

    Read some one of the previous comments, search the topic "EV CAR NOVATED LEASE". Bottom-line, really depends on your circumstances.

    I am planning to get a new EV SUV soon, tempted to sell my Forester 2020 but after phone conversation with the NL rep, seems like it's cheaper for me to go straight NL rather than paying cash considering the savings from Insurance, tyres, petrol, and etc, and just keep the Cash and spend at Kings Cross. Good luck

    I am at 38% tax bracket.

    • Montyjpm on 18/07/2024 - 16:03
      +10

      Please don't put petrol into your EV car.

    • Snoozer on 19/07/2024 - 09:39
      +5

      I'm sure the NL rep is giving you completely unbiased advice. The cheapest option is always to keep the car you have, especially if it's only 4 years old.

      • changyang1230 on 19/07/2024 - 10:36
        +1

        It really depends on how much your current car was still worth and its related running cost.

        In my case, selling my 25,000 dollar car was kind of cost-neutral with changing over to 5-year lease of 81,000 dollar Tesla when all financial impacts are considered

        Details here.
        https://www.reddit.com/r/AusFinance/s/VHJ25VpNKu

        • Snoozer on 20/07/2024 - 17:20
          -1

          I wouldn't consider spending $25k (current car) versus $72k (leased EV) cost neutral. I don't care how much the EV is supposedly worth after 5 years, you've still spent an extra $47k that could've gone on your mortgage or been invested some other way.

          • May4th on 20/07/2024 - 17:44

            @Snoozer:

            extra $47k that could've gone to ATO/your bank

            fixed

          • changyang1230 on 20/07/2024 - 17:46
            +1

            @Snoozer: Please kindly read my spreadsheet before disagreeing with me using “first principle”.

            I have very carefully looked at every aspect of cash flow, asset and liability when I made the above conclusion.

            The additional 47k impact has been fully considered and simulated.

            If it’s too long just read my summary statement. I am copying it here for your convenience.

            • Your 5-year lease sees the new EV costing 8216 less than keeping your old car, over 5 years of ownership.
            • At the end of 5 years, if you lease the EV, (compared to no car) you will have a car worth 40000 dollars, have spent 72466 in cash, and incurred 8390 additional home loan interest.
            • You also have additional 25000 dollars of cash back from the sales of the current car.
            • At the end of 5 years, if you kept the current car, (compared to no car) you will have a car worth 14000 dollars, have spent 25313 in cash, and incurred 12759 additional home loan interest.
            • The 8216 dollars saving consists of 26000 more in car asset, 22153 less cash, and 4369 less home loan interest when you opt for NL.
            • Some effects are not accounted for e.g. changes in government subsidy as this is too complex to fully calculate. Explore further in Section 3 - Adjusted Taxable Income.

            —-

            Note that I did use a relatively generous EV depreciation figure which may no longer be true with recent aggressive price cuts, so instead of EV being ahead as shown here, they may be roughly equal.

          • Jaystea on 21/07/2024 - 05:43
            +1

            @Snoozer: changyang1230 Is kind of a mathematical God and is well known in his professional community for having an intricate understanding of his numbers and finance. I wouldn't bother arguing, he's very right, and you're very wrong.

            • Snoozer on 21/07/2024 - 10:38

              @Jaystea: I've read the spreadsheet and I'm not disputing the calculations. I just think there are other factors not being considered by this spreadsheet. This scenario might work well for someone later in life who already owns a house and has a comfortable retirement planned.

              However, if you are yet to buy a house then a large loan of this nature will affect your borrowing capacity and could have a lasting impact on your financial future because of this. It may also put you under significant financial stress if you were to lose your job.

              • changyang1230 on 21/07/2024 - 12:06
                +2

                @Snoozer: These are all very valid caveats to consider for taking up NL and I have made significant effort to mention all of them both in my main reddit page (which is where I usually link to) as well as the spreadsheet itself.

                There are also some other consideration too eg impact on childcare subsidy, super guarantee etc.

                Overall, they are more favourable the more criteria you meet below:

                • ⁠high tax bracket (the higher you are, the more saving you get)

                • ⁠stable job (moving job or losing job are at best troublesome, at worst huge financial loss)

                • ⁠have a home loan offset account (the idea is that avoiding paying cash from day 0 saves you plenty of home loan interest with the current interest rate)

                • ⁠not needing to borrow money (for own house, investment property etc) during the lease term (having NL greatly decreases your borrowing capacity - I once heard that getting a 70k car on NL would reduce your borrowing capacity by 200k or more)

                • ⁠considered the impact on government subsidies (many people would receive less childcare subsidy etc due to the way reportable fringe benefit is used to assess your eligibility and amount receivable)

                • ⁠considered the potential impact of super guarantee (a small percentage of payroll very naughtily use the post-NL salary to calculate your super contribution - if they do, then you may lose some 1000+ per year in loss in super contribution by your employer)

                • ⁠considered your exit strategy at the end of the lease i.e. are you prepared and have the money to pay out the residual. If you don't, you might be stuck with perpetually leasing a car - which may no longer be such a good deal if the government removes the FBT exemption. If you pay out the car then you will own the car and continue to enjoy the low running cost of EV (assuming that it doesn't otherwise give you too much costly trouble - and it looks like most EV will do okay)

  • bemybubble on 18/07/2024 - 15:47
    +15

    Don't sweat over it - you wouldn't have been eligible for the EV exemption anyway:

    Eligibility

    You do not pay FBT if you provide private use of an electric car that meets all the following conditions:

    • the car is a zero or low emissions vehicle
    • the first time the car is both held and used is on or after 1 July 2022
    • the car is used by a current employee or their associates (such as family members)
    • luxury car tax (LCT) has never been payable on the importation or sale of the car.
      Benefits provided under a salary packaging arrangement are included in the exemption.

    https://www.ato.gov.au/businesses-and-organisations/hiring-a…

    • May4th on 18/07/2024 - 16:47
      +2

      spot on. also you lose the GST exemption on second hand vehicles

      • JackFrost on 21/07/2024 - 02:06

        Isn’t that only if they’re private sale cars? A used dealer will still apply?

    • RobotWizard on 18/07/2024 - 17:17

      Thank you

  • sumyungguy on 18/07/2024 - 15:48

    Firstly, does your employer provide novated leasing?

    • jv on 18/07/2024 - 16:02
      -1

      They might be self employed.

    • RobotWizard on 18/07/2024 - 17:17

      yeah, pretty sure only option is Maxxia

      • sumyungguy on 18/07/2024 - 17:22

        There's your first port of call, forget about the seller for now. It comes down to what service Maxxia is prepared to offer.

      • Juice-Wa on 19/07/2024 - 11:18
        +5

        Maxxia are thieves, their interest rates are through the roof! Would suggest finding out if you can use a different NL company.

        • pwnd on 19/07/2024 - 12:51
          +1

          Remserv are not much better. Guy just stopped answering my emails when I started questioning finance figures. Plus they bloat the contract with rubbish you will never need. I had insurance in there, then there was write off insurance. They also included a third party extra warranty on a brand new car….
          Scum

        • Dave1988 on 19/07/2024 - 14:17

          I second that, they are thieves, their estimate given to me for pretax amount was not accurate so i end up loosing 100$ fortnight in savings. Also they put me on car loan with quite high interest rate.
          Luckily I went for one year only option only

          • changyang1230 on 19/07/2024 - 14:43

            @Dave1988: Was the inaccuracy due to the recent tax bracket changes?

            They may have conveniently calculated prior to July 2024 and “forgot” to tell you that after the tax bracket shifts from 1/7/24 the post tax impact may become bigger.

            • Dave1988 on 20/07/2024 - 10:49

              @changyang1230: No this was back in 2019, they started lease term as i was told to pick the car, but forgot to put my paperwork in time for pretax deduction, so i missed out on around 3-4 weeks of pretax savings. So my after tax amount gone up for rest of the period.

          • Juice-Wa on 19/07/2024 - 16:04
            +1

            @Dave1988: That's why I checked the saving numbers myself through paycalculator. NL companies are always going to use a rough calculation method that looks as favorable as possible

  • netjock on 18/07/2024 - 15:49
    +1

    Do you know how much benefit or not it will have for me on $107K Per Year income before tax?

    Length of lease? Say 3 years.
    Residual value? Who knows say $30k
    Cost of car? $60k
    Running costs? $0 the mythical unicorn
    Novated lease company interest margin? 10%pa
    Insurance plus rego for 3 years? $3k x 3 = $9k

    Basically $60k + $18k margin + $9k = $87k / 3 = $29k pa and say 30% tax rate $8.7k per year saved in income tax. So basically you are tipping money into novated leasing pockets.

    Government could just make it FBT free as company cars but you know they need to wash the money through the profit engine of their mates.

    • freefall101 on 18/07/2024 - 16:36

      They are FBT free as company cars, that's how the whole thing works. But for most people the company isn't just willing to buy them a car, so a novated lease helps them structure the loan, costs and repayments without having someone internally having to manage all that.

      • netjock on 18/07/2024 - 17:01
        +1

        If you have the capital why would you be paying someone else 10%+ interest on funding.

        I wasn't that long ago BHP / RIO was borrowing at like 2%.

        You can mess with the number to dress up the profit numbers (like sale of properties and lease backs which usually ends up sending the company bust).

        You wonder why councils and public companies are not buying fleets of BEVs because they don't actually make sense at these prices. Only employees who think they will save tax.

        • freefall101 on 18/07/2024 - 17:28
          +1

          Your post doesn't make any sense, do you understand what fringe benefits tax is?

          When a company buys a car, they buy it and deduct the GST and amortisation regardless of what kind of car it is. FBT applies when they give it to an employee for personal use. There is nothing stopping a company buying cars and handing them out to employees to use but why would they? It costs money and brings them back nothing. I know a few people who run companies who have just bought their EV through the company to save money though, because they don't need to pay any FBT if it's an EV.

          They could go and arrange an agreement with the employee that they take an $x cut in salary equal to the reduction in value of the car each year plus the company will process any of the expenses incurred by the employee, along with wearing the risk of being left holding a car if the employee leaves. Or they could just pay someone else to do it - namely a novated lease company.

          Employees actually do save tax though. I don't know why you think they don't. Paying pre-tax usually means 30% savings, plus they don't pay GST, which is normally more than the interest.

          • netjock on 18/07/2024 - 18:36
            -2

            @freefall101: Nobody ever got rich novated leasing or dodging FBT. I'm surprised nobody is selling get rich quick courses.

            The problem is you are still putting money into a depreciating asset.

            If you take extreme example you salary sacrifice $30k instead of paying $14.1k in tax. So instead of getting $15.9k cash you have car that you don't own, can't sell, can't buy food or pay mortgage with. The joke I have is you don't pay the tax on the $30k, the ATO just chases the people you paid it to.

            You are going to now argue about how good the Tesla is… but that is a whole different intangible unable to assign a value argument.

            • freefall101 on 18/07/2024 - 20:19
              +6

              @netjock: Again, you don't understand how novated leases or FBT works. With a novated lease, the car is in your name. There is an attached loan that, when repaid, means you own the car. It's not a rental, it's a lease with a balloon payment for ownership. My 5 years of lease including balloon payment costs me $51k. That includes 5 years of rego, insurance, tyres, maintenance, interest, novated lease fees, any costs associated with the car. If I paid it out of pocket it would cost me $70k. It was a no brainer and I could leave my $50k invested for the 5 years.

              If you want to ride a bike to work and put $30k in crypto because a car is a "depreciating asset" then go for your life. FBT free electric cars are the biggest middle class tax dodge there is and, this being ozbargain, I'm going to take advantage of it.

              Also Tesla's are a pile of shit. I bought a BYD.

              • netjock on 19/07/2024 - 10:08

                @freefall101: I think you think paying $1 to save 47c is a good financial decision. I also don't think you understand the legal term "leasing"

                You don't own it according to consumer affairs Victoria https://www.consumer.vic.gov.au/consumers-and-businesses/car….

                Novated leasing
                Your employer may offer you the option of leasing a vehicle by effectively sacrificing a portion of your salary. This is known as a novated lease, which typically lasts three years. At the end of the three years, the lease is terminated and the car sold.

                When you lease a vehicle, you do not own it. However, you will be responsible for the operating costs incurred during the lease period. As a vehicle operator, you will be responsible for any fines or infringements associated with the vehicle.

                Before you sign, it is important that you understand the terms and conditions of the leasing package.

                • freefall101 on 19/07/2024 - 12:29
                  +2

                  @netjock:

                  I think you think paying $1 to save 47c is a good financial decision.

                  Again, if you don't want to own a car because it's a depreciating asset, go you. For me I need a car - not as an investment but as a quality of life improvement to transport myself around. I then ran the numbers and it was cheaper to buy a $50k EV with a novated lease than a $20k used camry.

                  I also don't think you understand the legal term "leasing"

                  I do, I also understand the terms and conditions of my leasing package, which doesn't say "google the legal term for lease". There's a 53 page agreement that I signed that includes that I have the option to purchase the vehicle at the end of the lease for the amount of the balloon payment. I am fully responsible for the decision on what I do, I could sell the car and pay off that amount, I could resign a new lease for the remaining value, I am responsible for it.

                  I quit my job and started a new one recently, want to know what happened? My company stopped paying the salary sacrifice amounts, that's it. They didn't repossess my car, they have no interest in owning my car. The leasing company didn't repossess it either, they don't want it. The payments and liabilities automatically reverted back to me to start paying them. My name is on the loan, the insurance, the car title, everything.

              • lordofdestruction on 19/07/2024 - 11:55

                @freefall101: Tesla has more sales in Australia. It looks like a lot of people aren't smart lol

              • drprox on 19/07/2024 - 15:57
                +2

                @freefall101: Give up on him mate haha

              • Juice-Wa on 19/07/2024 - 16:11

                @freefall101:

                I bought a BYD

                Seal looks nice, the rest look like a dogs (profanity). BYDs always have public charging issues too.

                They typically have the least knowledgeable drivers and are also the most likely to be spotted trickle charging above 90% on fast chargers with queues.

                • freefall101 on 19/07/2024 - 17:12

                  @Juice-Wa: Every time I look at the back of my car, I shudder. Fortunately I'm inside it most of the time so I don't need to know about it.

                  I generally don't do more than 400km in a day, so I just stop for a coffee for half an hour to go from 10-20% up to 80% and all is good. No idea why people use fast chargers to fully charge, that's just a waste of money.

    • RobotWizard on 18/07/2024 - 17:20
      +1

      Yeah, makes sense, All the online calculators I've used, none of them give you proper breakdown of costs etc, only think they put in BOLD is how much tax you could be saving.

      • datafellows on 18/07/2024 - 20:06
        -1

        I read somewhere that buying a car outright is cheaper than novated lease.

        Also, afaik, comprehensive insurance is not included in the novated lease.

        • uncompressed on 18/07/2024 - 22:05

          Comprehensive can absolutely be included in the lease, and you can either source it from the leasing company or get your own and have it budgeted under the operating cost and pay it out of your pre-tax income.

          • datafellows on 19/07/2024 - 07:10
            +1

            @uncompressed: Yes, sorry I wrote a bit hastily, I meant that in their weekly estimates that you pay for the car it wasn't included. I recently got a quote from Maxxia. Everything is like from $59 or so per week, just to suck you in. You have to really check your numbers if novated lease is cheaper for you.

        • drprox on 19/07/2024 - 15:58

          Wrong insurance is included and as for the other piece "it depends". Certainly if you change cars roughly every 5 years and earn over $100k it's worth looking into and understanding.

      • Juice-Wa on 19/07/2024 - 16:31

        Use this to do your calcs for your exact scenario:
        https://paycalculator.com.au/

    • changyang1230 on 19/07/2024 - 12:06

      Novated lease works alright, though I agree that at 30+2% income tax bracket the saving is significantly lower compared to top brackets.

      On top bracket it gave me a relatively cost-neutral upgrade from a used 25,000 dollar Mazda 6 to a 81,000 dollar Tesla. For lower bracket it won't be such a good deal but they may still get a nice 45,000 dollar BYD and be neutral or better off if their current car is a 25,000 dollar car.

      My spreadsheet calculator crunches these numbers in significant details.
      https://www.reddit.com/r/AusFinance/s/VHJ25VpNKu

  • freefall101 on 18/07/2024 - 15:51
    +1

    Pretty straight forward, you lose by paying interest and whatever lease fees, but you gain by paying it and car running costs pre-tax. The primary risk is if you change employer so you have to go back to paying the loan out of pocket (likely at an inflated interest rate, novated lease companies usually don't let you pick your loan) or hope your new employer supports changing.

    If your employer has a novated lease company they use it's simple to reach out and get a quote from them. Then run the numbers to make sure it adds up (don't trust their "savings" amount, it assumes you'd take out a loan at their rate, actually look at the out of pocket cash of lease vs no lease)

    I recently changed employer, and despite both employers using the same novated lease company I've been paying all my costs out of pocket for the past 5 weeks because none of their internal teams talk to each other at the lease company to close the old lease and open a new one. It sucks.

  • mboy on 18/07/2024 - 15:56
    +1

    I really tried searching, reading and using all these online Novated Lease calculators but I still can't get my head around it

    As someone who's gone through it recently, I know it can be a lot. But you really have to spend more time and effort getting your head around the calculators, because you'll only get a good idea of potential savings once you plug in estimated running costs, lease term, residual payment amount and actual repayment amounts (based on quotes from actual Novated Lease Providers). Also, consider any positive impact to offset or interest-earning accounts you may have, in terms of payments being taken out in a drip feed as opposed to all at once.

    I found it easier to create my own excel analysis based on my very specific circumstances and I determined that buying a new $72k Tesla would put me in ~$17k better position compared to paying cash upfront on a 2-year loan term (that includes offset impact). My savings would have been greater if I went a longer loan term, but I wanted to hedge my bets as far as being stuck with the same employer and not having to deal with the headache of moving (or risk of not being able to move) the lease across to a new employer.

    • netjock on 18/07/2024 - 18:41
      +1

      Complicated but it is the smart answer.

      Need to determine if the novated lease horse fit the course.

      Some people see tax savings as a main driver, it is like having the tail wag the dog.

      How many people driving $80k dual cab utes to drive kids to school and do the shopping. Would be cheaper to buy a $40k Corolla / Camry hybrid after paying tax on the $80k (lower deprecation, cheaper running costs)

  • Drakesy on 18/07/2024 - 15:57
    +4

    You're not earning enough to make novated leasing worth your while, really need to be well into the $150k+ before it makes sense. The interest rates are extortionate and the depreciation on a Tesla is quite significant.

    At your salary it would make sense to novate lease a BYD Atto 3 or MG4 for the GST and FBT benefits, however a full price tesla, polestar etc is not smart.

    • May4th on 18/07/2024 - 16:46

      do you mean cost of car in general? because the NL benefits would be the same for either car

      • Drakesy on 18/07/2024 - 17:00
        +1

        The benefits as a proportion of the car's value, i.e. the FBT rebate and various state rebates make up a larger proportion of the car's value the lower the cost of the car.

        • May4th on 19/07/2024 - 07:41

          I'm in NSW so the rebates don't apply to us any more but you can't access the rebates with NL I thought - as you technically don't own the vehicle

    • Juice-Wa on 19/07/2024 - 15:29

      You're not earning enough to make novated leasing worth your while

      That's quite an old school fallacy. I'm really not sure where the over 50s get this idea from. With incentives for FBT exceptions on an EV NL it roughly boils down to 30c for every dollar paid as part of your NL. Sure you get 37c from every dollar above 135k, but that's not enough of a difference to say earning under that makes it unviable.

      • Drakesy on 19/07/2024 - 15:47

        It's not really,

        Yes novated leasing is great to reduce tax, however, as previously reported the excessive interest rates (10-12%) + fees + depreciation on a $75k car is not a sound financial decision as the grants/rebates make up a smaller amount of the total car value.

        Sure if you're in the top tax bracket and effectively getting 50c in the dollar back it'll be worth your while, $107k doesn't really justify it.

        • Juice-Wa on 19/07/2024 - 15:52
          +1

          my NL was set at 9%. The matter of depreciation is negligent, if someone didn't want a brand new car they could just not buy a brand new car. The offset taxable income more than covers the interest paid and fees, making it a better value proposition than paying in cash. This isn't including the fact maintenance costs are GST exempt. NL companies are snake oil merchants, but if you customise your product and do the math yourself it works out in your favor when you want to buy new.

    • bemybubble on 18/07/2024 - 16:59
      +3

      Factually incorrect

      • MS Paint on 18/07/2024 - 17:05
        -2

        Factually prove it then.

        Why did my NL FBT rate go from 7% to 20% under the Gillard administration?

        • bemybubble on 18/07/2024 - 17:23

          They’re still beneficial or else all the package providers would be broke and out of business for starters.

          Yes they aren’t as good as they used to be. But to say they disappeared is, as I said, incorrect.

          Also the EV exemption is a game changer for some as it’s a free kick at the system

          • MS Paint on 18/07/2024 - 17:52
            -2

            @bemybubble: They are no where near as good as they used to be. The minor modern day NL benefits do not outweigh the risks or time associated with a NL. I've done the maths.

            I had a new NL every 3 years from 1999 to 2015 and enjoyed the benefits significantly especially when it was managed in house by my employer. As drakesy says below it's just a cash cow for the SS companies today.

            I'm not convinced the EV benefits are real. Let's revisit this thread in 2 years when all the EV leases are expiring, the massive depreciation of EVs continues and all of the payday benefits over the lease are absorbed by residuals far greater than the EVs value.

            • bemybubble on 18/07/2024 - 17:55

              @MS Paint: The depreciation in EVs has nothing to do with salary packaging. If someone borrowed to buy an EV without novating they would have the same concern

              • MS Paint on 18/07/2024 - 18:04

                @bemybubble: Factually incorrect.

                • bemybubble on 18/07/2024 - 18:06

                  @MS Paint: How so?

                  If I’m in the market for an EV and I needed to borrow. If I had the choice between novating and doing it off my own bat, the novating will come out on top hands down.

                  • MS Paint on 18/07/2024 - 18:18
                    -1

                    @bemybubble: And will you be thinking it's still a great idea when you have to pay the residual+GST and that figure varies greatly with the market value of your EV? Only time will tell. Watch this space.

                    • bemybubble on 18/07/2024 - 18:19

                      @MS Paint: Yea but hang on. That’s just one side of the equation. Add up the ebs and flows. You’ve neglected tax advantage, and, GST on purchase.

                      • MS Paint on 18/07/2024 - 18:24

                        @bemybubble: But will it outweigh the difference? As I said only time will tell.

                        Some of my work colleagues novated $70k Tesla's 12 months ago. The same car new is now $56k. In 2 years time when their NL is expiring I'm predicting there is going to be a lot of pain.

                        • bemybubble on 18/07/2024 - 18:33
                          -1

                          @MS Paint: @Muzeeb

                          Residual is generally calculated at a prescribed % by the ATO from original cost. In some circumstances the residual can be lower.

                          So if the concern is that the residual will be lower as the market value would be lower, isn’t that a positive thing insofar as salary packaging is concerned?

                          • MS Paint on 18/07/2024 - 19:48
                            -2

                            @bemybubble: I must not be explaining my prediction well enough or maybe I'm just talking out of my arse.

                            The residual value is calculated at the start of the lease and is based on ATO guidelines so SS companies don't shaft customers. It is a fixed known cost due at the end of the lease term.

                            An totally fictional example of what I'm trying to convey is…

                            Johnny has just finished his 3 year novated lease of his Tesla. The residual value to pay out the lease is $40k. Johnny is struggling to sell his car (because of massive depreciation) for $40k. A guy called @pegaxs offered Johnny $30k, the local car dealership is offering $27k and the online wholesaler is offering $24k. Johnny doesn't want the car as he has just committed to a new Camry for his next lease. Johnny decides to sell the car to pegaxs. Johnny now needs to pay an extra $10k using post tax dollars to finalise the lease. Johnny saved $9k over 3 years with the lease arrangement but is now realising it was false economy. Don't be like Johnny. Be like pegaxs.

                            • bemybubble on 18/07/2024 - 20:03
                              -1

                              @MS Paint: I get you. Let’s use the same example of Senòr John. However he borrows to buy the car without novating and has a balloon too. He has saved no money and, has actually lost out as his market value has tanked below his residual payout for the borrowing.

                              I think the moral here is don’t buy an EV at all as opposed to not salary sacrificing to buy an ev, agreed?

                              • MS Paint on 18/07/2024 - 20:06
                                +1

                                @bemybubble: Definitely don't be like Senòr John. Who the f#@k takes out a personal car loan with a residual?

                                • bemybubble on 18/07/2024 - 20:10

                                  @MS Paint: Lots do for cashflow. But to be honest anyone buying a car hoping to resell it at the end for the residual is delusional anyway

                            • Juice-Wa on 19/07/2024 - 15:40

                              @MS Paint:

                              Johnny is struggling to sell his car… he has just committed to a new Camry for his next lease

                              sounds like Johnny can't do math very well and makes poorly informed decisions. Perhaps inherited by the creator of his fictional character?

                              You're pretending like the valuation is any different to most cars bought brand new. The used car market has stabilised now and you're slashing large portions of the out of pocket expense of a brand new car the moment the ink is dry on your purchase paperwork (maybe with the exception of a few cult car make/models).

        • freefall101 on 19/07/2024 - 00:12
          +1

          EVs are FBT free. So the FBT rate will be 0% under the current rate.

          All your problems are with buying an EV, you even say yourself the dropping value with EVs are the real problem, not the novated leases.

    • Drakesy on 18/07/2024 - 17:01

      You're not wrong, Novated Leases are now a cash cow for the salary sacrificing companies under the guise of 'tax savings'. Gone are the days where you'd be far better off, 12% interest rates are common and undermine any benefits otherwise.

      • netjock on 18/07/2024 - 18:43
        +1

        When I first saw the policy from the government I thought it is just to enrich their corporate mates. If you follow the money trail any GST savings would be eaten up by finance costs. Then running costs and insurance rolled up would have a margin / commissions.

        If government really wanted increase take up on BEVs just make it GST free. It is like a grant for everyone that can afford it. People can arrange their own finance.

        • Drakesy on 18/07/2024 - 20:42

          Get outta here with your sensible policies.

          It wouldn't be a subsidy without lobbyists getting hold of the money.

          • netjock on 19/07/2024 - 10:07
            +1

            @Drakesy: Some guy above thinks it is a tax dodge.

            The joke is the government just chases the guy you paid for the taxes. Paying $1 to save 47c. I am surprised there is no course they are selling for thousands.

            The name of the game is to retain as much cash as possible and invest it out of the clutches of the government.

        • Juice-Wa on 19/07/2024 - 15:41

          They're GST free in QLD

          • netjock on 19/07/2024 - 15:50

            @Juice-Wa: GST is a federal tax. State might be just rebating exactly the same amount but it should be same everywhere if they want to make it equitable not just those who can access NL.

            • Juice-Wa on 19/07/2024 - 15:57

              @netjock: Sorry, you're right. I guess someone pays for it, but the main thing is that it isn't me :D

  • Hellfire on 18/07/2024 - 17:26
    +3

    I recommend that you do the numbers yourself to see if it's worth it. If you are in the top tax bracket then it's basically free money.

    Here is a great calculator and you can get more information in the thread too:
    https://www.reddit.com/r/AusFinance/comments/1c5b9xx/ev_and_…

    • changyang1230 on 19/07/2024 - 00:27

      Get a quote then use this calculator to calculate real saving (i.e. compared to cash / car loan) instead of the supposed "tax saving" (while ignoring additional interest and charges.

      (I wrote that spreadsheet - it is free and unbiased, and has other comparisons that the generic NL company calculators don't tell you e.g. "compare this with keeping my old car", "what about my reduced government subsidy" etc)

  • AustriaBargain on 18/07/2024 - 18:27
    +1

    33k is good isn't it? Even if it falls apart in a few years, you'll still be ahead compared to the lease yeah? And besides you'll probably be spoiled for choice for EVs by the time your Tesla craps out.

    • JimB on 19/07/2024 - 13:48

      Depreciation is superb.

      I'm looking forward to getting a cheap facelifted (2023/24) Model 3 update or a BYD Seal in a couple of years time.

      Will make a cheap run about as a 2nd car.

      I don't like the looks of the original Model 3 but at least it had indicator stalks :o

  • Wiadro on 18/07/2024 - 19:37
    -3

    cash is king

    • hopper on 19/07/2024 - 14:15

      when u receive it

    • Juice-Wa on 19/07/2024 - 15:42

      Righteo discount Ned Kelly

  • taoz on 18/07/2024 - 21:04

    from memory you couldnt buy private sale for a lease. Might have changed, as I have purchased a used car for lease years ago and had be dealer

    • uncompressed on 18/07/2024 - 22:10

      You can do so. It's called a sale and lease back.

  • Ozbfan on 18/07/2024 - 21:58

    I heard of people who work for uni’s are also gst exempt, apparently they get teslas on 1 year terms, pay balloon and then sell and rinse and repeat every year and they are basically cost neutral. I wonder what other industries are also gst exempt.

    • Hellfire on 18/07/2024 - 22:05

      All EVs on novated leases are gst free

      • MS Paint on 18/07/2024 - 22:11

        Do you mean FBT free?

        • Hellfire on 18/07/2024 - 22:18

          No. GST is not payable up to around 7k, so for vehicles up to aroun 70k you wont pay GST.

          • MS Paint on 18/07/2024 - 22:21
            +1

            @Hellfire: But there's GST on the residual?

            • Hellfire on 18/07/2024 - 22:41

              @MS Paint: Yeah, should have said purchase price (and running costs) only.

              • MS Paint on 18/07/2024 - 22:45

                @Hellfire: So just like every other novated lease under the LCT value since 2000.

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