Salary Sacrifice

nutty · Post by **nutty** » Wed Jan 16, 2008 10:56 am

Hi guys,

Ive been looking into buying a new car.

Ive basiscally got my mind made up on a Golf GTi.
Anyway though my work on behalf of a company I can salary sacrafice the car, and I want to know what people's experence is with it.

Basically got a quote for one, came back @ $1,000 a month for 2 years, with a $18k Residual.
But that includes Fuel/Service/Tires/Rego/Insurance for the 2 years.

Does anyone Lease? it seems like a stupid idea not too..

r8response · Post by **r8response** » Wed Jan 16, 2008 11:10 am

Lease = Tax write off, its generally the way most people go

Montey · Post by **Montey** » Wed Jan 16, 2008 12:04 pm

Really do your numbers well.

I have used salary sacrifice & leasing before and in the end my conclusion was that I was not much better off.

Unless the majority of your income is taxed at a rate higher than 30c in the dollar (you have to be earning over $75k to be in that bracket) there is no real benefit to sacrifice as fringe benefits tax is 30%. Even then, however, you don't get much benefit until you are well in to the top tax bracket ($150K+).

bengatta · Post by **bengatta** » Wed Jan 16, 2008 5:23 pm

Montey wrote:Really do your numbers well.

I have used salary sacrifice & leasing before and in the end my conclusion was that I was not much better off.

Unless the majority of your income is taxed at a rate higher than 30c in the dollar (you have to be earning over $75k to be in that bracket) there is no real benefit to sacrifice as fringe benefits tax is 30%. Even then, however, you don't get much benefit until you are well in to the top tax bracket ($150K+).

agree... please do your numbers really well...

my lease it about $1700/month which includes it all... FBT etc...

Make sure you understand what the fuel and tyre component is when you are workign out you K's...

My fuel component alone is $460/month... cont see them doing a Gti with fuel for 1k a month...

put it this way... my lease prior to taxes, stamp duties, fuel is $1200 for a Commodore aclaim... the residual can sting you also... if it is a finance lease, you are stuck with buying the car at the end, or selling it for the value owed on it...

if it is an opperating lease, they are stuck with the value, but that can also catch you, depending on the reconciliation clauses, which always incldes fuel, and sometimes includes residual...

It can vary from company, but the less the lease per month, the more risk the end user takes at the end, the more the monthly fee, the less risk the end user has...

if they budget $100/month for fuel and you use $500/month for fuel, then they will hit you with a bill at the end for the difference...

put it this way... in December this year, my car is off lease, and I will not touch leases again... I am not doing a university degree in accounting just to run my life anymore... all this BS is starting to piss me off...

Check the quote thoroughly and check each clause in the agreement, do not listen to what the leasing company tells you...

others may have had a happy experience with leasing, but after 2 years of it, I have had enough of it... I will buy my next car...

ashsimmonds · Post by **ashsimmonds** » Fri Jan 18, 2008 10:37 pm

You won't get the answer you're looking for from me, because... well, I'm me!

But for that lease price, you could almost be into something really decent.

Of all the cars I've driven, the Golf GTI is one of the most boring. There are a few split-second moments in hard corners where that DSG really actually matters, but the rest of the time I'd rather be on public transport.

For probably $1100 (ish) a month, you could lease a Honda NSX.

What else is there to say?

Pinger$ · Post by **Pinger$** » Sat Jan 19, 2008 11:21 am

snob?

w00dsy · Post by **w00dsy** » Sat Jan 19, 2008 11:25 am

ashsimmonds wrote:
Of all the cars I've driven, the Golf GTI is one of the most boring.

you drive cars? i thought you just sit next to rich guys and take pics

ashsimmonds · Post by **ashsimmonds** » Sat Jan 19, 2008 11:27 am

w00dsy wrote:you drive cars? i thought you just sit next to rich guys and take pics

Driving a Porsche later today - someone's trying to convince me it's just as exciting as a Lambo.

Gougoodthing · Post by **Gougoodthing** » Sat Jan 19, 2008 2:23 pm

Nutty, it VERY much comes back to how many kilometres you travel.

Like the other guys said, do your numbers.

I can lease a car thru my work as well, but even with the most optimistic accounting I could do (I wanted it to work out) including selling the current family car and using the proceeds to reduce debt/save interest, i was gonna be hundreds of dollars a fortnight worse off. (Mainly because it wouldn't be used enough)

Latch · Post by **Latch** » Sat Jan 19, 2008 5:23 pm

bengatta sounds on the ball. But I'd like to clarify a few things said by others. FBT is not 30%. It is 46.5%. So if you're less than top marginal ($150,000 pa) it won't make much sense.

Also, it doesn't just depend on the number of km's you travel. If you maintain a log book with high business usage you'll get pretty good results as your business % is otherwise deductible. Either that or drive over 40,000 in 12 months and you'll get the lowest statutory rate, but that's still 7% of the base value of the car. Even with the >40,000 km pa and a $40,000 car you'll be salary sacrificing roughly $2,772 in FBT alone.

ashsimmonds · Post by **ashsimmonds** » Sat Jan 19, 2008 11:36 pm

ashsimmonds wrote:
w00dsy wrote:you drive cars? i thought you just sit next to rich guys and take pics
Driving a Porsche later today - someone's trying to convince me it's just as exciting as a Lambo.

Way O/T now, but if insterested see latest update on my car thread:
---> http://arse.norbtech.com/phpBB/viewtopi ... 408#142408

AstrO · Post by **AstrO** » Sun Jan 20, 2008 1:04 pm

bengatta wrote:my lease it about $1700/month which includes it all... FBT etc...

Jeebus, that's more than my mortgage! Although I'm sure that will change soon, bloody interest rates

Damn the US the sub-prime stupidity!

bengatta · Post by **bengatta** » Sun Jan 20, 2008 2:26 pm

AstrO wrote:
bengatta wrote:my lease it about $1700/month which includes it all... FBT etc...
Jeebus, that's more than my mortgage! Although I'm sure that will change soon, bloody interest rates
Damn the US the sub-prime stupidity!

I did say all inclusive...

I put the number in there because the original post of $1K did not sound enough... just on fuel, fbt, insurance, regestration alone, a fair wack of your $1000 is gone... then you have to finance the car, I am guessing gti is around $40K, even at 70% residual, that means finance of $12K, so if zero interest was charged, that still equates to $500/month, and we all no finance companies don't like chargine interest...

we have not even included services yet, which as we all know, car dealers like to charge sympathetically

There is a price to pay to drive around in a fully maintained brand new car every 24 months...

to be honest, after 10 years or so of it, I am over it, if it aint a race car, I have no interest in it... so whether it is a brand new VE Calais, or an SR falcon, I see nothing in it anymore... They are all shit, so paying big $$$$'s for them makes no sense to me anymore... I do not regret a single cent spent on cars over the years, but as you get older, you simply grow out of it...

if you are into new cars, leasing is a way forward... but remember there is a price, and I am not 100% sure it is as little as $1000/month... not doubting that that was the quote received, I am however recommending you make sure you know what is and isn't included... some leasing companies version of fully inclusive is different to others...

like simple things... if you crack a windscreen, for me, I just get it replaced, it is included... others see that as extra...
if something fails that is not covered under warranty, it is replaced (provided I didn't break it deliberately), others only include, "as per the scheduled servicing...", anything outside of that is charged extra...
mine gets picked up and delivered back during servicing, others you have to get it to the dealer, and arrange your own way to work, etc...
mine comes back washed and vaccumed at services, others it is extra... (OK, that is not a biggy, but... it is nice

)
like I said, check what you get and what is included...
mine comes with tyres about every 35000k's, others push it much further so you need to care more...

as far as I can see, ALL reconcile fuel, so if you budget $50... and spend $500 they will get you...

yeah, $1700 sounds heaps, but that is everything, I just drive... if the windscreen gets cracked, I don't have to stress, I just "ring obriens", if the battery shits itself, I just "Holler"... if the tyres get scrubed, then "it's another job for Bob"...

another thing to remember is if you employment position does not require a vehicle to perform that role... (sales, service, delivery, onsite work), then legally you can not be given the tax rebates on purchase for fleet vehicles, but a lot of people get around that one if your company is willing to be nice to you and adjust your job conditions on paper

... and that can depend on the size of the company...

Leasing is good... if you do your numbers, and understand fully your situation...

and I am sure you can get cars for $1000/month, without the frilly bits...

AstrO · Post by **AstrO** » Sun Jan 20, 2008 4:02 pm

bengatta wrote:if the tyres get scrubed, then "it's another job for Bob"...

Doh! You just reminded me that I need to replace my tyres... The Dunlop Sport 3000A's didn't last very long

bengatta · Post by **bengatta** » Sun Jan 20, 2008 5:22 pm

AstrO wrote:
bengatta wrote:if the tyres get scrubed, then "it's another job for Bob"...
Doh! You just reminded me that I need to replace my tyres... The Dunlop Sport 3000A's didn't last very long

Well then, pop down to see Bob, apparently he does a good job... a nice set of allrounders should do nicely...

or get yourself a set of Michelins... at least they are European sounding

Do they still make Kelly Springfields???

AstrO · Post by **AstrO** » Sun Jan 20, 2008 5:37 pm

The original tyres were Michelins, I have to say they did last longer than my current set of Dunlops. But the Dunlops were cheap* (Michelins were ~$400 per tyre) and had more grip .

*cheap being $800 installed with a tyre road hazard warranty, which paid for itself on my first puncher and saved me cash on the 2nd.