novated lease

I was under the impression that you could only novate a lease on a car,
and that motorcycles were excluded (since the ATO still will not let you
claim travel expenses for motorcycles, despite using it for precisely
the same purpose as a car).

But it seems that I was wrong (or that they have changed the rules). You
still can't claim normal travel expenses on a bike you own, but
apparently you CAN get a novated lease on a motorcycle after all.

So if you're going to finance your bike anyway, you are much better off
to get a novated lease, as it is a backdoor way of then being able to
claim the costs the ATO would otherwise knock back. Better still, you
get to claim ALL expenses related to the running of the bike, as opposed
to just those related specifically to work usage. It still means the ATO
is screwing you if you own the bike already though.

Definitely something I'll be keeping in mind next time I go shopping.

 

Before you get too carried away, check on the insurance quotes. :-(

regards,
CrazyCam

 

Some lease companies let you novate a bike you already own, if it's less
than 4 years old. They buy it off you and then lease it back to you.

Rob

 

What an utterly daft world we live in!


BTH

 

Be vewy, vewy careful Damien. Let me give you an example.

You buy a new bike on a novated lease. Bike costs $22K of which $2K is GST.
Next month you get the GST back. You owe $20K. Over three years the finance
will cost you around $500 per month with a $7K balloon over three years.
This will take $115 a week off your gross pay saving you $36 a week in
income tax if you're earning between $30K and $75K, or $48 a week if you're
earning more. Beauty!

Now we get to the FBT bit. If you travel > 40K per year your FBT will be 7%
of $22K (yes, not of $20K) $1540 or $30 a week. OK, you're $6 or $18 a week
ahead. OTOH, if you do between 15 and 25K a year, your FBT will be $4400 a
year or $85 a week. Not looking good is it? If you do < 15K per year the FBT
is $5720, $110 per week.

The second year your vehicle depreciates, but not for FBT. Still based on
$22K, Ditto for the third year. The fourth year you can depreciate it by
30%.

Forget it mate.

Theo

 

Yeah, well, I couldn't be arsed doing too many sums, but, when I
investigated this kind of thing, it was amazing how much money you had
to hand out to various folk to try and dodge a bit of tax. :-|

regards,
CrazyCam

 

What? you just noticed?

Moike

 

*Boggle* Theo's post is relevant too, but just for the record:

" Utility trucks, panel vans, large passenger-carrying vehicles and
*motorcycles*

" If you owned, leased or hired (under a hire purchase agreement), one
or more of the following vehicles and used them for work purposes, you
can claim the costs you incurred relating to this work use (for example,
the cost of petrol and oil):

· a utility truck or panel van with a carrying capacity of one tonne or more

· a vehicle with a carrying capacity of nine or more passengers

· a motorcycle

" You can claim the costs you actually incurred. As these types of
vehicles are not considered to be cars you cannot use the ‘cents per
kilometre’ method or any other method described at item D1 to calculate
your claim.

(c) Australian Taxation Office 2007 "

Item D2 of the Tax Pack for PAYG people, rules are the same for
self-employed and proprietary limited and completely different for
Murdoch and Packer. While you can't claim depreciation you can claim the
(work-related) loss when you sell the thing instead. It's simply the
difference between accrual and cash-book accounting because the ATO
doesn't grasp accruals.

 

I've been claiming business costs for a bike on my tax for years,
using the cents per km method. Never had a knock back or query from
the ATO.
I might add I have got back a fair amount on the claims. Maybe I've
just been lucky that nobody had looked too hard at my return ;-)

SteveB

 

...until 5 years before you're audited.

Nev..
'04 CBR1100XX

 

Too many poofter drinks.


BTH

 

You forgot about the fact that rego, insurance, petrol, servicing,
consumables (e.g. tyres, chain) and any other running cost that does not
involve a capital improvement to the bike is also claimable. You get all
that GST and income tax free.

Might do a few numbers of my own. Lets assume:

Annual Income $75000
Purchase Price $22000
Lease Payment $500/month
Lease Time: 36 months
RV: $7000
Annual Km: 20000
Rego: $550
Insurance: $500
Servicing/Maint/Consumables: $750
Petrol: $1000
Setup/admin cost: $400

Nett annual income after paying that without salary sacrifice would be
$47,703.06

Nett annual income after salary sacrificing is: $49,174.74

That is using the contribution method to eliminate the FBT liability.

Works out to be an extra $1471.68 per year or $122.64 per month in your
pocket.

The exact same numbers based on 25000ks per year works out to be an
extra $184.89 per month in your pocket, and that isnt taking into
account that the extra running costs, meaning the savings are really
higher that that. I just assumed the same running costs for simplicity.

For the sake of comparison, leaving the running costs the same and doing
14999k's per year works out to be $81 per month extra in the pocket.
When you take into account that fact that the running costs would go
down, the savings wouldnt be much.

That said, its worth doing the sums based on ones own situation because
the savings can be there even if at first, it might seem like they wont.
Just blindly saying its not worth it is just being short sighted.

For those of us out there who are lazy (like me), this is a good
calculator to use: https://www.smartsalary.com.au/_asp/calculator/calc.asp

I used it to work out the examples here using the car lease page.

 

Sure. But, as we all should know, running costs are not very much of the
total cost.

Agreed. But thinking it will be a huge saving can also be a trap you then
can't get out of.

Where we have employees that use their own vehicles for work we pay $0.69
per km, plus parking etc.

Theo