Novated Leases

[Sturty]

Hey all, What a great thread! I have normally not bothered with novated lease, preferring a normal car loan (asset purchase with balloon). The main reason is that I use my car 90% for work, so could claim all of the costs back and this was cheaper than the high costs associated with a notated leasing. However, I am now a bit stumped with buying my Tesla, as there are good benefits with FBT exemption. Can I ask, how do the lease companies account for ongoing costs, as there is no fuel, no services, minimal wear on Tyres, ie there is so much less cost. Under these circumstances, do you think a novated lease is a good option, or pay the FBT and do a normal loan depreciating the car at 90% business use?

Your theory about minimal wear on tyres is quite wrong, it's the opposite due to the rapid torque and added weight. In addition, the EV tyres are expensive right now.
Servicing is low cost but not low cost - $34 a month budgeted in my case.

It all depends how much you earn, but as I'm sure you know, you cannot claim any work expenses on a novated lease as you don't own the car, so in your case I don't see it stacking up.

 

[Quickst]

employee.

A Novated in the easiest way because the employer does not have to do anything and when you leave that employment the car is your liability.
However it is by far the most expensive.

As you have a high work related use. it might be better to get a chattel mortgage with balloon and claim the work related expenses on your annual tax return including the 4.2cents/km electricity costs.

Maybe spreadsheet the difference with a quote from a Novated company vs a DIY. DIY mean you get a refund with your tax return because you paid for work related expenses with your after tax money and then claiming it at tax time. Novated means you pay with your before tax money (your employer deducts the monthly novated amount from your pretax wages) but there is no tax refund at end of financial year.

The difference is in timing - comes out of your pretax fortnightly wages with no tax refund, or comes out of your post tax fortnightly wages but get a tax refund plus the differential costs of finance

Tle novated leasing companies allocate an amount to pay for estimated outgoings/expenses which is then taken out of pretax wages each fortnight. It is up to you to the use that as you have already paid for it, otherwise think its pure profit for the novated lease company

 

[Wagits]

Hey all, What a great thread! I have normally not bothered with novated lease, preferring a normal car loan (asset purchase with balloon). The main reason is that I use my car 90% for work, so could claim all of the costs back and this was cheaper than the high costs associated with a notated leasing. However, I am now a bit stumped with buying my Tesla, as there are good benefits with FBT exemption. Can I ask, how do the lease companies account for ongoing costs, as there is no fuel, no services, minimal wear on Tyres, ie there is so much less cost. Under these circumstances, do you think a novated lease is a good option, or pay the FBT and do a normal loan depreciating the car at 90% business use?

I am in same position. So then I started thinking, if I get a car on nl in my name, can I allocate that to my wife(retired) and I can still have my work car which I can then claim on?
Caveat- I don't want to do anything which is illegal, just wondering if it can be done within the letter of ATO law.

 

[cafz]

minimal wear on Tyres

Who told you that? The wear on tyres isn't any less than any other car, and may be more if you're enthusiastic with the right foot. I reckon I spend more on tyres than on electricity.

 

[B3AU]

Tle novated leasing companies allocate an amount to pay for estimated outgoings/expenses which is then taken out of pretax wages each fortnight. It is up to you to the use that as you have already paid for it, otherwise think its pure profit for the novated lease company

Any unspent funds for running costs (registration/insurance/tyres/electricity/car washing/etc) should be returned to you at the end of the lease, taxed at your normal rate. You may even be able to request a 'refund' mid lease, or just lower your deductions going forward if you find you've overbudgeted.

Profit in that it could be earning interest for 'them' but it's not lost money if you don't spend what is deducted

 

[Quickst]

I am in same position. So then I started thinking, if I get a car on nl in my name, can I allocate that to my wife(retired) and I can still have my work car which I can then claim on?
Caveat- I don't want to do anything which is illegal, just wondering if it can be done within the letter of ATO law.

Im assuming you are an employee?
If so you can get a novated lease.
How you drive the car or who drives the car is irrelevant
However you are effectively making a tax deduction on the EV - the ATO effectively allows 100% business use because it is FBT exempt.
Whether you can additionally make a tax deduction on a 2nd car is an area of law that you should discuss with your accountant.

 

[dronus]

Any unspent funds for running costs (registration/insurance/tyres/electricity/car washing/etc) should be returned to you at the end of the lease, taxed at your normal rate. You may even be able to request a 'refund' mid lease, or just lower your deductions going forward if you find you've overbudgeted.

Profit in that it could be earning interest for 'them' but it's not lost money if you don't spend what is deducted

I rolled my last NL balance into my new lease which took care of a few payments.

I’m not sure why the other guy said you lose it, you certainly don’t

 

[Maximillan]

Who told you that? The wear on tyres isn't any less than any other car, and may be more if you're enthusiastic with the right foot. I reckon I spend more on tyres than on electricity.

I'm on 23,000kms on a RWD MY and am unlikely to see 30,000kms without requiring new Hankooks. I started a thread on it about a month ago and I found out that I wasn't the only one.

The wear may not more or less than any other car, however the original EV tyres do have their peculiarities.

I decided to forgo all maintenance on my novated lease, and after 20 months wish that I'd budgeted $80/month for new tyres.

 

[aceon]

I decided to forgo all maintenance on my novated lease, and after 20 months wish that I'd budgeted $80/month for new tyres.

Ask your NL company to invoice your employer for the amount you need ($1800 or so?) for an adjustment. They’ll do it almost immediately and then you can claim the tyres from the NL budget. Saves you your marginal tax rate!
Of course it reduces your next month’s gross pay by the amount (eg $1800)

 

[Quickst]

Ask your NL company to invoice your employer for the amount you need ($1800 or so?)

Depends on whether the employer wants to be involved in that. A lot of employers don't want to do stuff like that. That's extra work for your employer's bookkeeper/accountant. It's not a matter of an odd invoice. It changes the super/workers comp for that pay period and the next.

 

[Max Spaghetti]

the 4.2cents/km electricity costs.

Has anyone had any luck claiming charging this way with a Novated Lease? I’m struggling to get an answer from Maxxia.

 

[Sturty]

Has anyone had any luck claiming charging this way with a Novated Lease? I’m struggling to get an answer from Maxxia.

Didn’t Maxxia literally send out an email last week saying they’d approved that method now? However you can’t claim any fast charging if you claim the home charging method

I’m a) not with maxxia and b) haven’t even begun paying for my lease yet so take it with a grain of salt

 

[dronus]

Didn’t Maxxia literally send out an email last week saying they’d approved that method now? However you can’t claim any fast charging if you claim the home charging method

I’m a) not with maxxia and b) haven’t even begun paying for my lease yet so take it with a grain of salt

For the 40 odd cents I’m paying for my daily commute I’m not sure I could be bothered going to all the trouble claiming for it anyway.
Maybe claim fast charging when going on long trips but again it’s a complication I really don’t think I care about. I guess you could download the history from the respective apps, or if they issued you chargefox/evie card that’s linked to their account but I’m not sure it works that way.

Was different with an ice car as petrol is heaps expensive and it just went on the fuel card and sorted itself out.

I might be getting lazy or just learning that whatever spare time I have I’d rather stare at a tree than be doing paperwork haha

 

[Quickst]

For the 40 odd cents I’m paying for my daily commute I’m not sure I could be bothered going to all the trouble claiming for it anyway.

Dont Donate to the Guvment any more than is necessary

 

[Max Spaghetti]

Didn’t Maxxia literally send out an email last week saying they’d approved that method now?

If they did, my email address must have dropped off their list. But that is good news if true. Hopefully they will respond to my question in due course.

However you can’t claim any fast charging if you claim the home charging method

That is a good point. I have deliberately not claimed a single receipt from fast charging since the car was new for this very reason. I would rather send them one odometer every 12 months than be filling out forms and uploading receipts every time I fast charge (with a nod to Dronus' aversion to paperwork noted above which I also subscribe to). I do over 30,000km/year, so the 4.2c/km is a $1260+ claim.

But it's more a matter of principle for me: Just because the ATO has "difficulty" in working out how EV owners should claim their running costs doesn't mean it should be thrown in the too-hard basket. I also set out at the beginning of this project with a goal to leasing a Tesla for no more out-of-pocket than a Camry. I like watching peoples eyebrows raise any time they ask me about my Tesla: "It was this or a Camry - I got the Tesla because it was cheaper".

 

[dronus]

Dont Donate to the Guvment any more than is necessary

 

[AussieOwner]

Looking at a NL through SGFleet.

Anyone have any tips? They wont budge on interest rates (as previously suggested). I have also removed all the other non-necessary items from the quote. Are there any hidden 'gotcha's' i need to be aware of?

 

[Sturty]

Looking at a NL through SGFleet.

Anyone have any tips? They wont budge on interest rates (as previously suggested). I have also removed all the other non-necessary items from the quote. Are there any hidden 'gotcha's' i need to be aware of?

Be careful with your definition of non-necessary, because if you do end up needing it (such as tyres) it won't be budgeted and thus will be post-tax when you do need it and negate a lot of the benefit.

My only advice is compare their insurance offering with what you can get on the open market. For some it is noticable, for others not.

 

[cafz]

Be careful with your definition of non-necessary, because if you do end up needing it (such as tyres) it won't be budgeted and thus will be post-tax when you do need it and negate a lot of the benefit.

Yes, the allocation for things like servicing & tyres isn't a payment to them - it's your money being set aside pre-tax to pay for those thing as they arise. If you allocate too much it'll just end up being repaid to you eventually (with tax taken out, of course!).

 

[dronus]

Yes, the allocation for things like servicing & tyres isn't a payment to them - it's your money being set aside pre-tax to pay for those thing as they arise. If you allocate too much it'll just end up being repaid to you eventually (with tax taken out, of course!).

This is good advice.
Most NL companies I’ve dealt with over the years are not there to rip you off, their relationship with your employer is more valuable than a few bucks that they give back to you anyway.
Furthermore as they do it all the time they kinda know what is needed, and it’s all transparent these days online.
You can get things cheaper, but takes more ongoing effort etc. I guess it depends what’s more valuable to you.
I prefer to set and forget, enjoy driving the car. Don’t skip on maintenance or insurance, a poor man pays twice.