New FBT and leases

[turbodewd]

So I hear the FBT got dropped from 26% to 20% and u only need to do 15,000km to qualify. Has anyone done the sums on whether leasing is more or less cost effective now?

and im in the middle of a lease...does this mean Im stuck on the current system until my lease expires?

[jpd80]

Originally Posted by turbodewd

So I hear the FBT got dropped from 26% to 20% and u only need to do 15,000km to qualify. Has anyone done the sums on whether leasing is more or less cost effective now?

and im in the middle of a lease...does this mean Im stuck on the current system until my lease expires?

Basically, the people who drive to and from work got rewarded while people who use their vehicle for lots of work kms got screwed..

All Novated leases FBT liability will standardized 20%, that's the amount subject to FBT , not the tax.

0 to 14,999 Km:
- Existing 26%,
- after May 2011 20%,


15,000 to 24, 999 km stays at 20% FBT liability


25,000 to 34,999
- Existing 11%,
- after May 2011 14%,
- after May 2012 17%
- after May 2013 20%

40,000 km and above:
- Existing 7%,
- after May 2011 10%,
- after May 2012 13%
- after May 2013 17%
- after May 2013 20%


And it's the reason novated leases have stayed away in droves from Falcon and Commodore,
the assumption by the tax commissioner is that resale values are much better than they actually are...

LINK - Here
The alteration in this area was widely expected and very few column inches or editorials will be dedicated to debating its merits. This said, it is a significant change which will deliver close to $1 billion in savings to the Australian Federal Government. While some may see their savings reduced, the main point to takeaway should be that the initiative will see novated leases becoming much more prominant amongst drivers who cover less than 15,000 kilometers per year.

[turbodewd]

This is why i favor massive income tax reform. I would massively simplify the system. It tries to be equitable and I dont think it gets there. It is just a massive admin cost and burden to everyone.

Id work out which deductions could be easily abolished, work out the value of them and then reduce tax rates by the same value. Id leave it to the boffins to get the exacts sums right.

You'd save billions and be able to retrench half the ATO and put those people to more productive use in the economy.

[Crazy Dazz]

You have to crunch the numbers on the package being offered to you.
As a general rule, yes it still offers savings to those in the top tax bracket. As the rate is applied to the cost of the car, it is most effective for vehicles that are cheap to buy and costly to run. The down side is that most of the companies that promote their novated lease services are thieving bandits. The novated lease provider for our company was chosen by our HR department.
I did the numbers on the package they offered me and they were charging over 16% interest in the lease.