Novated Leasing Questions

amorphous2111 on 09/08/2024 - 14:39

Hi fellow Ozb,

I am thinking of doing an NL for a Sealion 6 via my employer. It will have to be done through a specific company. I did a test-quote but there are a few things which are not clear to me so would appriciate your help here.

  1. GST: Do I have to pay GST on the purchase price? I understand that the GST will need to be paid on the balloon value but in my test-quote it has "payment without GST", then "GTS", then "payment with GST). Not sure what is the actual pre-tax amount I have to pay? Generally when I do salary sacrifice for things like Phone or Laptop, the GST component paid during purchase is returned to me.

  2. What is optimal time for NL? 24, 36 months? Looks to me like 24 is better since the balloon value is 56%

  3. If I arrange for insurance, tyres, servicing, roadside assistance, fuel by myself, can I claim those running cost by submitting receipt to the leasing company, or via my tax return? Looks like the insurance by the NL company is twice the quote I can get, but it would insure for a higher value of the car because if it is written off I would have to pay for the full 24 months + baloon value, which will be more than the market value of the car.

Thank you,

Financial Novated Lease

Comments

  • spackbace on 09/08/2024 - 14:47
    +4

    2 month process…

    I wonder how much longer until you make a decision lol

  • wannagrababargain on 09/08/2024 - 15:39
    1. GST is effectively not paid on the purchase price. It is credited to the lease provider as an input tax credit. GST is paid on the balloon should you decide to purchase the car off the lease company at the end of the lease for the residual cost (+GST). This residual excl. and incl. GST is usually stated on your quote. For example if the car originally cost $60k (ex. GST) and the residual is $20 k / $22 k (ex. / incl. GST) you've saved $6000 GST at the start but will pay $2000 GST at the end as part of the $22k payment to the lease company. You've still saved net "$4000" on GST component at the end of the day vs buying outside of a lease/FBT arrangement. The running costs are also GST free..

    Pre-tax amount should be stated on the quote. Components that make this up should be itemised out on the quote. The lease company may also, with knowledge of your salary, be able to estimate your net impact to take-home pay.

    1. Depends on personal choice/circumstances. Residual values are determined by ATO depreciation rules. Yes it's front loaded, so at two years a big chunk can be depreciated. The balloon will be much bigger though. Maybe this is useful if you want to switch to a new lease every 2 years or don't want to be 'locked in' in case you want to switch employees. Longer lease on the other hand lets you spread the finance payments over a longer time and stay in the game of the tax savings on running costs. With how well built cars are I would say 4 years can work out well.

    2. Insurance - maybe, depends on the lease company - The financing side of things is usually pretty strict about insurance coverage. The car is owned by the lease company so they're the ones insuring their interest, not you. Everything else - Yes but you still need to budget for it in the quote and have money taken out every month pre-tax so that the lease company has money in their pocket that they've taken out of your pay to pay for those reimbursements. Reimbursement claim would be submitted to the lease company and be calculated based on the FBT year running from April to March. Only interaction with your tax return is reportable fringe benefits which is by default supplied by your PAYG direct to the ATO anyway.

    • amorphous2111 on 09/08/2024 - 16:14

      thanks, seems like what I unserstood. just don’t know why they have the “payment with GST” in my quote.

      the baloon value is specifed in the quote as well, 56% for 24 months.

      Would be good if I can arrange for other running cost and claim it back from the leasing company. In the quote they allow you to choose “fuel”, “tyres” etc with the leasing to by yourself. But it is unclear to me if I choose to do those myself whether I still need to pay a fixed amount pre-tax to the leasing company, then later claim back. What if my cost is lower than the pre-paid amount? for example I typically do tyres from Ebay and fit them with a local BJT, about 30% cheaper.

      • uncompressed on 09/08/2024 - 17:01

        If your total running cost is lower than what has been budgeted, i.e taken out of your pay pre-tax, you will get it back at the end of the lease (with tax taken back out). However, if you don't budget these costs, you might be asked to vary or adjust your novated lease to include them.

  • Wiadro on 09/08/2024 - 15:54

    nope

  • MelbEng on 09/08/2024 - 16:05

    Hope you go well arranging for fuel for a EV!

    Servicing and tyres you need to go through the leasing company. It will be possibly cheaper and much easier for you as you have already paid for it as part of your lease.

    • knasty on 09/08/2024 - 17:14

      You can pay for any running costs directly and then get reimbursement from the leasing company by supplying the tax invoice. So long as the budget for that item exceeds the cost you paid, they will reimburse it. If not, they may request a variation from the employer to deduct an additional amount for it. In my experience it much cheaper doing this than going through a 'preferred' provider.

  • Duckie2hh on 09/08/2024 - 16:05

    nope

  • brad1-8tsi on 09/08/2024 - 16:13

    1) I have no idea.

    2) In 2008 I leased 12 months (wasn't sure if the car would be a POS), then 2yrs and another 2yrs. After that there was no tax advantage & I paid the balloon & kept it another 8 years.

    3) I paid for all my expenses & claimed it back from the lease company. It was an easy process and they paid within 2 weeks of claiming. Nothing got knocked back including a Bluefin tuning box from the UK & parts I bought from the USA. They just needed an invoice and a exchange rate for that date.

  • apple2016 on 09/08/2024 - 16:15

    If I arrange for insurance, tyres, servicing, roadside assistance, fuel by myself, can I claim those running cost by submitting receipt to the leasing company,

    most NL companies allow you to do this. however check with your NL provider.
    Most new car insurance come with replacement new car for first 2 years. This should be good enough, if your car get written off, you can switch it to the new car provided my the insurance company.

    • amorphous2111 on 09/08/2024 - 16:17

      Thanks, awaiting email from them now.

  • amorphous2111 on 09/08/2024 - 16:17

    Btw, anyone tried the new Sealion 6?

  • changyang1230 on 09/08/2024 - 17:12

    For EV NL, the longer the lease is the more saving you achieve.

    You do have to balance the fact that you are tied to the car for the extended duration, and that if you lose your job or have to change employer half way through it can be problematic.

  • bloom on 10/08/2024 - 07:37

    SL6 is BEV so will be excluded from FBT exemption in April next year. I.e. any new NL after April will cost a lot more

    • amorphous2111 on 10/08/2024 - 10:42

      Yes but I think the FBT is applied through out the life of the lease, e.i if one locked in a NL now for 3 years it will be FBT free until 2027.

      • bloom on 10/08/2024 - 11:15

        Correct, keep that in mind when you pick your lease term, I’d go 4 or 5 years

  • Terbo on 14/08/2024 - 16:51

    Have leased same car - went for longest lease available because total cost is pre tax so more beneficial - eventual after tax payout will be less, though extra interest over that period is drawback. PHEV wont be FBT free after 2025 either so cant re lease this car type. Sought own insurance that was cheaper and better re excess, new for old, glass roof coverage. Just submit to provider and when salary deduction accrues they will refund payment. Have only been doing shorter trips so still have first tank of fuel that started with 1000km range, just plug in overnight for another ~75km of travel. Very nice fitout, fine to drive for general suburban travel, premium model has some power if required. Bought integrated dash camera for ~$100, fairly easy to fit. Also Carlinkit box for Netflix, YouTube, etc on the big screen while waiting for kids activities (not while driving of course).

    • amorphous2111 on 14/08/2024 - 21:57

      Yeah I should be getting mine next week. Just the Premium dual motor and some floor mat.

    • modernhunter on 01/09/2024 - 20:03

      Hi Terbo, did you negotiate to chose your own insurance beforehand. Almost pulling the trigger on the SL6. Just having NV anxiety and over researching. Did you find it an easy process and do you recommend it? Enjoyed the test drive and all the features of the SL6

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