Labor Electric Car FBT discount

[DavidFH]

If you initially purchase the car through finance, then resell to a leasing company, wouldn't you lose the GST benefit?

Yes you do, but the GST saving is only actually on the difference between purchase price and residual value in the long run (when the lease ends if you take ownership you pay GST on that amount). It therefore depends how long you lease for, your taxable income etc. etc. Lots of different scenarios that could exist.

The ATO's minimum residual value after 3 years is around 47%, so if you leased for that length of time you (sort of) only save 53% of the GST.

Agree it is better to lease from the start, but I don't like the risk that if something did change in the bill I could be stuck with a much more expensive lease with no major tax benefit. To me this way is a bit like buying insurance, I pay a bit more to mitigate a greater risk.

 

[Matt3112]

Yes you do, but the GST saving is only actually on the difference between purchase price and residual value in the long run (when the lease ends if you take ownership you pay GST on that amount). It therefore depends how long you lease for, your taxable income etc. etc. Lots of different scenarios that could exist.

The ATO's minimum residual value after 3 years is around 47%, so if you leased for that length of time you (sort of) only save 53% of the GST.

Agree it is better to lease from the start, but I don't like the risk that if something did change in the bill I could be stuck with a much more expensive lease with no major tax benefit. To me this way is a bit like buying insurance, I pay a bit more to mitigate a greater risk.

I’m in the same boat, have finance approved at 2.99% and now with this fbt bill it’s thrown a spanner in the works. Have to know which way to go. The finance is through Tesla and they also have break fees if you leave early. Just a hard decision to make.

 

[gm12]

I have a model 3 on a 1 year novated lease which expires in September.
If the legislation is not pasted, I can vouch that a 1 year lease is still financially worth it, and buys you time until it's all sorted out. However anything longer than 1 lease doesn't have any advantages unless we get this FBT inventive.

 

[skyworxx]

I wonder if rather than leasing through someone's financing, my company can just buy the car outright and lease it to me. Means I/the company would save a lot in interest. Is anyone planning on doing similar?

 

[_ajs_]

That's disappointing... If they don't come back before that date it has no chance of being passed until the earliest October 26 / 27...

And the explanatory memoranda says that the law won’t come into being until change of FBT quarter - ie if passed on 27 Oct, not until 01 Jan 23. But then backdated to 01 Jul 22.

Man I don’t envy accountants!

 

[skyworxx]

I wonder if rather than leasing through someone's financing, my company can just buy the car outright and lease it to me. Means I/the company would save a lot in interest. Is anyone planning on doing similar?

Just heard back from one leasing company that they won't do that. It needs to be leased through their dealer (I'm not quite sure how that works with Tesla though)

 

[BareFeetTom]

I wonder if rather than leasing through someone's financing, my company can just buy the car outright and lease it to me. Means I/the company would save a lot in interest. Is anyone planning on doing similar?

I’m just getting my (own) company to buy it and I will use it. No GST, FBT or leasing interest.

 

[Matt3112]

So another Novated Lease company my employer uses has informed me they will set up a novated lease as if the Bill had been pasted (0% FBT). They did mention that if it doesn't pass they will then do catch up payments for the FBT and spread it out. Not sure this is a benefit really, especially if you have to catch up on FBT payments (operating cost model 80% work kms in my case).

I still can't make my mind up as to which route to take, and the car get's here in a couple of weeks too...no pressure! Gone from wanting the car to now questioning the way I'm paying for it.

 

[evbee]

So another Novated Lease company my employer uses has informed me they will set up a novated lease as if the Bill had been pasted (0% FBT). They did mention that if it doesn't pass they will then do catch up payments for the FBT and spread it out. Not sure this is a benefit really, especially if you have to catch up on FBT payments (operating cost model 80% work kms in my case).

I still can't make my mind up as to which route to take, and the car get's here in a couple of weeks too...no pressure! Gone from wanting the car to now questioning the way I'm paying for it.

Which leasing company is this?

 

[AndrewSa]

So another Novated Lease company my employer uses has informed me they will set up a novated lease as if the Bill had been pasted (0% FBT). They did mention that if it doesn't pass they will then do catch up payments for the FBT and spread it out. Not sure this is a benefit really, especially if you have to catch up on FBT payments (operating cost model 80% work kms in my case).

I still can't make my mind up as to which route to take, and the car get's here in a couple of weeks too...no pressure! Gone from wanting the car to now questioning the way I'm paying for it.

Yep I'd be interested in knowing which lease company this is even if I use it to twist my own... I'm restricted to using lease company "NLC"...

 

[ucheokeke]

For VIC EV owners on a Novated Lease – is the ZLEV Road User Charge included/budgeted in your lease?

Been getting mixed messages from the leasing company :S

 

[Priit]

So I purchased my current Model 3 SR+ 3 years ago with novated lease and my employer is basically passing all the costs on to me. If this legislation gets ratified, then my best solution is to break my current 5 year novated lease 2 years early, sell the car and purchase another, as it would be much cheaper without the 47% FBT that I have been paying for the past 3 years and would continue to pay as the new legislation only applies to cars first purchased/delivered after 1/7/2022 as per the legislation draft they read in parliament.

 

[mike_j]

So I purchased my current Model 3 SR+ 3 years ago with novated lease and my employer is basically passing all the costs on to me. If this legislation gets ratified, then my best solution is to break my current 5 year novated lease 2 years early, sell the car and purchase another, as it would be much cheaper without the 47% FBT that I have been paying for the past 3 years and would continue to pay as the new legislation only applies to cars first purchased/delivered after 1/7/2022 as per the legislation draft they read in parliament.

This is actually smart design - it means there is an extra EV on the used car market.

Going forwards there will be a bigger incentive to sell your car at the end of the lease and novate another new one. Those that can novate/package a new car will, and those that can't should get a lot of options for 3yr old (on average) used EV's at a good price. It's not 100% fair for everyone but it will do good things for the number of EV's.

 

[Priit]

This is actually smart design - it means there is an extra EV on the used car market.

Going forwards there will be a bigger incentive to sell your car at the end of the lease and novate another new one. Those that can novate/package a new car will, and those that can't should get a lot of options for 3yr old (on average) used EV's at a good price. It's not 100% fair for everyone but it will do good things for the number of EV's.

I agree and suspect that was the reasoning behind putting that clause in the legislation, as that does release more electric cars to the second hand market and increases the number of new electric cars coming on the road, so overall has the impact they are looking for this legislation to have. If enough second hand cars drop on the market, then the second hand prices start dropping also making the cars more affordable for the ones that cannot handle the cost of new ones.

 

[Matt3112]

Just an update, I signed up for a 3 year novated lease using the operating method (80% business use). This I feel is the safest way for my situation, with this method if the bill does not pass I will not have to make "catch up payments" for the tax missed out on. With this set up, my novated leasing company has informed me that when the bill is passed they will just amend the payment set up making it cheaper (as all funds come from pre-tax). They believe I may be due a tax return when it passes also, as the bill is back dated to 1st July.

Even if the bill does not pass, I've calculated that there is hardly anything in it (circa $2k difference) in my situation using the operating method. That's even with my approved loan at 2.99%. Would rather have the money in the bank as an offset on the mortgage, safer option against interest rate rises... just my risk factor.

 

[Jusebert]

Interestingly the Senate Committee for Economics page for the Electric Vehicle discount bill says that they will have the report by 2 September, unless that's an typo.

This would mean that the bill could pass the house of reps with that report in the September sitting and potentially get through the Senate as well if we are lucky.

 

[JHole]

I wonder if rather than leasing through someone's financing, my company can just buy the car outright and lease it to me. Means I/the company would save a lot in interest. Is anyone planning on doing similar?

You should query a solicitor that does lease work. I don't think there is anything stopping your company from doing this.

 

[skyworxx]

Thanks, but I have already set up a normal novated lease. Car is coming soon and I needed to get things settled quickly

 

[Skurfer]

My model 3 I get this month will be on a 12 month lease. Any idea whether the FBT exemption continues if I extend the lease when it is coming to an end or would I need to get a new car or lease for a longer period at the lease start?

 

[cafz]

My model 3 I get this month will be on a 12 month lease. Any idea whether the FBT exemption continues if I extend the lease when it is coming to an end or would I need to get a new car or lease for a longer period at the lease start?

The rules as currently written just say it has to be a car first used / available for use after 1 July 2022, so it would continue to apply if you re-lease it.