It’s getting cold here in Canberra and I’m getting lazy as I age, so I started looking at getting a novated lease through my management company. Apparently I need to do some stupid amount of driving to reduce the fringe benefits tax on such a vehicle – I thought 15 000km a year would be tough enough, but it seems the FBT goes down significantly if you do more than 25 000km/pa?
How many of you guys ride bikes a lot, while also satisfying the terms of such a lease? If someone set me that target to ride on my bike I’d think of it as a fun challenge, but for a car, I might as well just buy some warmer / drier cycling gear and harden up…
They’re a good deal IF you legitimately use your car a lot for work. If not it’s a potentially expensive PITA.
Unless you will drive the car the 25k (or 15) in a year you will be stung with heavy $ penalties for finishing your year under (or over) your k’s.
This sort of salary sacrifice/novated lease deal was first offered at my workplace about 8 years ago and a lot of people got stung with bills running into the thousands in their first year because all they used their car for was driving to work and doing the shopping. Fortunately in my department we have a man named Terry, who has three daughters who all play rep basketball. He spends most of his life in the car driving from nunawading to frankston to geelong to ballarat etc so now everybody lends their lease car to Terry to run their k’s up for them (he has a lease car too but reaches his k’s each year in about 3-4months).
Another thing to think about is the novated lease/FBT thing provides a perverse incentive to pollute - it forces most people to drive a car more than they really need to so if you give half a shit about your impact on the planet, think hard about doing it. And unless your fuel is packaged too you’ll be out of pocket for extra $1,000s in fuel that you probably didn’t need to spend, just to avoid an FBT penalty (money you could have spent on bikes!).
my $0.02
Buy some warm cycling clothes and enjoy those crisp, clear canberra mornings.
If you do get this novated lease car, whatever it may be, is the cost per year really worth it just to be driving some swank new vehicle, wasting your time doing more k’s than you need AND polluting the environment?
I know if i was commuting in cbr with its complete lack of traffic, id want to be driving something a bit more fun than a fairmont or xr6 (most leased cars at my work are these, but most drive from geelong to the city everyday)
For less than a lease would cost per year, you could buy a car outright that is more comfortable, fast, better handling (whatever excites you about cars really) etc than a regular leased car.
We could all ride $500 giant mtbs to work everyday and itd be fine, but it wouldnt be as exciting as riding our track bikes! i view it the same way as your car issues.
While we’re on the topic, if we can already salary sacrifice a yearly train ticket and/or a friggin’ lease car, we should be able to salary sacrifice BICYCLES! The UK has a scheme involving rebates & a kind of salary sacrifice for bike purchases (but I believe the choice of bicycle is limited to certain approved “commuter” bikes - you can’t for example go out and by a classic 'nago master olympic or similar on the scheme - bummer)
British Columbia (western state of canada) removed the provincial sales tax on bikes last year (worth about 7.5% on your sale price). you also get tax rebates for public transit tickets and car-sharing programs. i also been claimed my bike miles as car miles for a while (i need fuel and my vehicle needs repairs and consumables like tyres, i checked with our finance dept and they could see no issue with it)
Doing more kms to pay less tax is the biggest load of shit ever. Incentive to pollute is just insane.
That said, I’ve had free use of my bro-in-laws lexus for a few trips to qld and melbs, so it’s paid off for me. He’s an economist and reckons the scheme is a crock of shit.
Yeah, if I could claim normal and government mandated safety measures, such as new tyres, regular servicing, lights and reflective clothing etc, I would.
The problem I have with Canberra is that it’s a place designed for cars, so everyone else has one – it’s easy to be unsociable without a car. Maybe I just need more cyclist friends and colleagues…
(otoh my photography has markedly dropped off since I stopped driving a car – my cameras have seen little use in the last 13 or 14 months )
if you can prove that you only use your bike to and from work, and your safety gear is only for that bike, you can claim it as a deduction.
you can deduct it in a similar way to a car log book. under work related travel expenses. unfortunately, you cant actually claim to and from work, so the easiest thing to do is ‘pick something up’ on the way to work each morning. like the paper.
as for novated leases. get a loan, use the log book method to deduct the car. balloon payments and leases only work for sales people, and those who actually get use out of FBT.
people who buy cars on leases and arent doing high k’s are misinformed of the benefits and pitfalls, or plain stupid. FBT is not really as great as it used to be, and is only applicable if your employer pays FBT. The saving also isnt really that great.
with the money you saved on not getting a lease car, the petrol, and by using the logbook method to deduct your car, you could buy a rental property and use that as a deductible.
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