Question about leases

[Anonymous]

Guys I think you are missing the point to leasing/CHPing a vehicle!!!

1st you should be claiming back your leasing payments.....dont know what % you would be claiming but it should be at least 80%...else WHY ARE YOU LEASING A VEHICLE????So in reality yes it appears you have only paid off $896 but you are are going to offset the payments(plus running costs) against your taxable income....read bigger tax refund come June! Doesnt matter if its a Novated lease or not cause it all reduces your tax payable!

2nd most of the lease charges acrue in the 1st 2yrs or so of a 5yr lease...so in reality with all loan products(car-lease&CHP etc/home loan/personal) you pay a loan out in the 1st year(even 2nd) what do you expect?

3rd you annoyed about the GST but you didnt pay the GST on the vehcile up front you only paid it on the payments, since you havent made all the payments yet off course it is ALL due!!! However this amount should be the same either way(so the govt isnt ripping you off twice). If you took a CHP, you would pay GST(Fed govt) on stamp duty(state govt) so then you would pay a tax on a tax! :x Mind you its very small.

4th I dont think you are paying stamp duty on the contract, only the car rego. You cant get round this. If you buy second hand, instead of the dealer charging you and then paying the state govt, when you transfer the used car to your name you pay it direct...the same amount of 3% for NSW(same for other states?)

Sorry if this seems a bit critical, but i see people misinformed with this situation every day. I dont know all the ins and outs of your situation but i think what i have said covers it! Did you get any financial advice when you bought the car ie"you should consider this loan because....."??

BTW "Rule of thumb is never lease/loan anything that is a depreciating asset, like cars" is a bit "blanket" innaccurate. Yes if it is not a business purchase this is an unfortunate problem with buying on credit . However for business purchases this can be an excellent way to minimise cash(flow) output to have a new vehicle as you can either depreciate the asset or claim the payments (plus interest and running costs depending on the contract type)against your taxable income/company tax. Hence the govt pays whatever marginal tax rate % of the amount you pay. Yes there is still a loss, but if you are on the 49% bracket(is this right..49...50...51? cant remeber) then you only pay the balance yourself!

Wow a big post

[Jass]

Personally i wouldn't lease a car.... leasing companies are a bunch of bastards, when i was enquiring about getting my wheels they wanted me to pay 1600 dollars a month for the car. Sure thats before tax but still what i rip off.

Best way safe your money and buy the thing outrigh, bloody hard to say 40k but its worth it in the long run

[SmellyTofu]

The advantage of having a lease is that you don't tie your money up into a depreciating asset so you can put the money into an appreciating asset like a house (well, more likely to appreciate).

[ultim8DTM5]

Ashley: I wasn't mentioning business at all, so ner ner! FBT etc etc etc

Smelly; like I said, put the money elsewhere that makes you MORE money then...

[sijay]

Thanks Ashley - I was hoping someone had an intelligent way to say that. Im not sure the ins and outs but have a bloody good accountant. Long story short - the govt pays for my car repayments, if I sell it in three years the market value is greater than the balloon at the end of the lease and I walk away with some cash towards my new Astra (prob K by then!)

[Anonymous]

Thank you all for your input. Some of it was very helpful in me determining how to go about dealing with this issue.

I have one final question you guys might be able to shed some light on.

If I have leased a car, and use it only for travelling to a PAYE job, can I still claim tax on the repayments.

I hope this isnt a stupid question.

Thanks again for everyones help.

[SmellyTofu]

No you can't claim. Travelling to and from work (for a job that does not require a car) is not a tax deductible item.

However, if you have negotiated with your employer to have a salary sacrifice to have a novated lease, then the expense of the car will (as the term salary sacrifice means) reduce your tax that you have to pay at the end of the year. But the thing is that the company pays FBT so depending on how your employer likes you and ready to accept this expense.

[Anonymous]

Actually you can claim travel to and from work....but only if you are classed as an intinerrant worker(probably misspelt iiittttiiinnneeerraannnttt )...that is you regularly travel to different sites for work.

Interestingly....if you use the car for work and pay cash for it you can still depreciate it so da govt pays for some of your car...ummm....i mean asset!

[SmellyTofu]

Actually you can claim travel to and from work....but only if you are classed as an intinerrant worker(probably misspelt iiittttiiinnneeerraannnttt )...that is you regularly travel to different sites for work.

Interestingly....if you use the car for work and pay cash for it you can still depreciate it so da govt pays for some of your car...ummm....i mean asset!

That's what I mean by a job that requires your own car for your job as I was when I was with Suttons. I had to have my own car (kinda ironic for a car company) to do my job as I travelled from dealer to dealer.

[Jass]

Your work for Holden Suttons at Waitara??