Salary sacrificing

[svo347]

People im considering salary sacrificing a new car but am unsure of the exact pros and cons of doing it. Can anyone shed some good and bad on this... Thankyou....

[Sam]

Started doing it this year, in short. Brand new VE SV6, 19" wheels, window tint, fleet pricing, vehicle is financed for $31000 by leasing company. I earn between $95 -$100K per year, i do 25,000km per year and it costs me $1660 per month before tax. In cash in hand terms i loose around $220 per week to have the car. It is leased for 3 years. With a residual of price of around $17,500 when i sell it or hand it back. It works for me.

[bob^]

My BA is salary sacrificed as well. $38k onroad works out to approx $28k inc 9 grand residual after 5 years. I end up paying $41860 for my car over 5 years including running costs.
$161 a week after tax - all inclusive. $800 a year maintenance and $60 a week fuel is included in that, as is rego and insurance. I must do 25000km or more a year.
I really wouldn't buy a car any other way.

[RSgerry]

speak to an accountant first. they will tell you exactly how much better or worse off you will be. if the salary sacrifice company are called paradigm, then stay away. customer service is nothing short of appalling. also check the fuel card deal, i was given a caltex fuel card which provided a 2c per litre discount, however, i could get 4c pl with a fuel docket, and caltex were charging $30 per month for the privelige. the dealer wouldnt accept the card for payment for services either as caltex were too slow at paying the bills.

[gz1]

Salary sacrifice (novated leasing) is a great way to own a car especialy if your company allows GST credits, as then you also get the GST breaks. However it works different for different folks so look at your case carefuly. One of the bigger traps is the FBT (Fringe Benefits Tax) you have to pay. It skyrockets if you do less than 25,000 k's per year. Look at the quote you got from the leasing company, at 31k finance cost and doing 25,000 k's the FBT component should be about $3400 per year. Should you fail to achieve the mileage and do only let's say 24,000 k's in the year you will be hit with an FBT bill of $5270. That is an extra $1870 of tax for the privilege of not driving your car. It is even worse if you have a more expensive car, as it is worked out as a persantage of the cars cost.
On the other hand if you can comfortably drive 25000 + k's per year it's a great deal.

[Lukeyson]

great info guys, i was also thinking of doing this, but would be doing under 10'000kms a year in the vehicle, so it seems not the way to go for me

[MYVYSS]

Originally Posted by XR8fella

great info guys, i was also thinking of doing this, but would be doing under 10'000kms a year in the vehicle, so it seems not the way to go for me

FBT at 10k a year its about 40 Percent.

15k-25 K is 20 percent

25001 - 40k is 11 percent

40k and over is 7%

If you are only doing 10k a year DONT BUY IT

[Son of Tucky]

Originally Posted by MYVYSS

FBT at 10k a year its about 40 Percent.

15k-25 K is 20 percent

25001 - 40k is 11 percent

40k and over is 7%

If you are only doing 10k a year DONT BUY IT

Agree with this.

I'm salary sacrificing my Typhoon for 3 years and I have to do 25001km per year or the FBT would be way too high.

This is the 3rd vehicle I've salary sacrificed and the biggest benefit has been in general budgeting terms. A fixed amount is deducted fortnightly from my pay and that takes care of all the costs for the vehicle for the term.

[DBourne]

it depends on who you work for yeah? ie. so if the company you work for doesn't do it then it's not an option? or are there 3rd party companies that do it for you?

probably a rediculous question...

[Son of Tucky]

Originally Posted by SgtBourne

it depends on who you work for yeah? ie. so if the company you work for doesn't do it then it's not an option? or are there 3rd party companies that do it for you?

probably a rediculous question...

Yep, pretty sure it depends on your company and if they have any arrangements with leasing companies. (That's my case anyway, correct me if I'm wrong anyone.)

[AC/DC]

I salary sacrifice approx $10 000 per year into superannuation.

The main advantage is it can drop you to a lower tax bracket, and contributions are made "pre" tax.

This is the difference between opting for a standard Falcon, and a Fairlane as a work deducted vehicle, and thus means that I can retire very comfortable at the age of 55. ( only 20 years away )

AC/DC

[Sam]

Yes it matters who your employer is, i work for a catholic, non profit, non gst paying mob that make the whole deal alot easier, all gst charged is credited back to me during the year.

[svo347]

Looks like im transfering to BHP Billiton nickel west, Ravensthorpe and they salary sacrifice.... have to see what other option are thankyou peoples