Salary Sacrifice Vehicle - Calculations

• 

  JimmyF on 14/05/2018 - 22:48

  +9

  New baby. Wife will stay at home

  Maybe don't spend so much on a new car then…. you're going to have LOTS of costs coming up!

• 

  Geryatric on 14/05/2018 - 22:55

  Go for a car < $25k

• 

  [Deactivated] on 14/05/2018 - 23:26

  +5

  2 kids in family day care for 3 days per week.

  This is what will kill you financially. Save your money for this. Buy a cheaper car.

  Source: been there done that

• 

  shadmaster4 on 14/05/2018 - 23:31

  +1

  We live remote and require the 4wd.
  I know kids cost a ton!
  Presently have a Ford ranger, but will be getting rid of it for the newer 4wd before any major problems arise. Repairs where we live are very very expensive out of warranty

• 

  spackbace on 15/05/2018 - 00:46

  Option 2) Bank Loan 8.49%

  This is where dealing with the dealership helps. Toyota will do ~6.9%. Push hard and they have access to a 4.9% rate.
  (if you're in the ideal financial position etc etc)

• 

  ShannonN on 15/05/2018 - 01:35

  +1

  maybe wife should stay at home and look after kids rather than work or let a day care centre raise them?

  • 

    FoxJump on 15/05/2018 - 07:10

    I can see why you got some negative votes there.

    But I can see what you mean.

    Sometimes it's nice to go to work and keep touch with colleagues and maintain some sanity.

    • 

      ShannonN on 15/05/2018 - 10:39

      +2

      I accept that my views are not that of modern couples who think both should work to get the car boat house trips etc
      So be it.
      But knowing many girls that work at day care centres and tell true tales of almost abandonment for the chance to avoid raising their kids …

      The kids often think the day care workers are the mums as they only see their real mother at weekends and then may be told to toddle off and play as mummy has to do the laundry or watch catch up TV

      Yes I'm old school, if you are going to have them it's your responsibility to raise them not hire others to do it

      I stand by for millions of neg votes by the day care loving crowd :)

      • 

        Allwentmarching on 26/05/2018 - 20:15

        Strange, I know loads of daycare workers and none of their opinions match yours. And yet none of the 2 parent working families I know own a boat. True enough they do live in houses - perhaps you expect them to be homeless?

        Being 'old school' obviously excuses one from noticing that most kids have 2 parents. Never shall we consider that both parents could work part time. Or maybe their FATHERS could spend time with them on the weekends too.

      • 

        ShannonN on 26/05/2018 - 23:46

        @Allwentmarching:

        Well I assure you the girls I know say that or I would't have even said it but there is always someone with a different view, knowledge etc

      • 

        Allwentmarching on 28/05/2018 - 19:00

        -1

        @ShannonN: In Australia very low %age of kids are in full time child care, for the record, and a lot of those that are are because they are wards of the state, or use it for special needs, etc. Did your 'girls' mention this?

        I'm also REALLY curious how you know what the full time working mothers do in their own homes on weekends. Unless you have hidden cameras into their houses or something, how on earth could you, or one of your 'girls' know what goes on?

        Stats show that overall ALL parents including working mothers spend more time with their children then a generation ago.

• 

  FoxJump on 15/05/2018 - 07:08

  By salary sacrifice do you mean novated lease?

  If so, doesn't the novated lease people give you a big discount on the car by some dealery magic? And save GST on the purchase?

  Orix, the novated lease people I go through for my work gave me a rate of 5.3%, an $11000 discount on the car, charged $0 dealer delivery charges, and saved the initial GST.

  So my 65k Pajero resulted on a finance amount of only 52k

  • 

    shadmaster4 on 15/05/2018 - 09:05

    +1

    The quote they have given me already included all the benefits you mentioned.. but their finance rate from my inquiries in the past is criminal… like 12%. I will look into other novated lease companies. They really like to hide the rate, and dont post it in their documents unless you persistently ask. Thats how they "gotcha"

    • 

      FoxJump on 15/05/2018 - 09:34

      Criikey! That is the worst rate ever!

    • 

      Eeples on 15/05/2018 - 10:52

      Yes, that is my opinion too.

      They hide the interest rate you get from their own preferred finance company. But you may be able to shop around for better finance to use with the novated lease company; if the company allows it.

      If you have previously claimed a tax deduction for work related expenses for your vehicle then you can not claim those anymore.

      Also watch out for extras piling up such as small accident cover etc.

      PS. I have just come off a 5 year novated lease and it wasn't that bad actually. The convenience of the fuel cards and the servicing was great. I just paid my 'balloon' payment of $9200; which I didn't think was too bad considering my 5 year old car I just insured for $22k (2013 Turbo Veloster).

    • 

      avocado on 16/05/2018 - 23:40

      Yep…finance brokerage owner here. I've also worked for 3 novated leasing companies in the past, so know how to break down the numbers.

      I snip plenty of business from NL companies charging huge rates.

      A novated lease is a great way to buy a car, but it needs to be set up correctly.

      Feel free to PM if you'd like me to look it over.

• 

  chumlee on 15/05/2018 - 07:26

  +3

  Repairs to your current Ranger when needed will still be cheaper than buying a new Prado.

  • 

    Euphemistic on 15/05/2018 - 08:29

    Depends on the age of the Ranger a bit, but agree that a car you know is better than a second hand car and cheaper than a new one.

    • 

      shadmaster4 on 15/05/2018 - 12:00

      My ranger has already had the transmission replaced under warranty, and the rear main seal replaced.
      If you follow a ford ranger forum, the rangers have flawed transmissions and rear main seals. Any one of those if they go after warranty is gonna cost big bucks.

• 

  [Deactivated] on 15/05/2018 - 07:26

  Will it it be advantageous to salary sacrifice when wife returns to work? IE, better child care rebates

  It’s irrelevant. Your benefit will be based on your total income, ie the $105K, whether you salary sacrifice the vehicle or not.

  • 

    Wibbleman on 15/05/2018 - 09:35

    Not irrelevant, child care rebates are based on you and your spouses combined taxable income. Salary sacrificing your vehicle reduces the amount of taxable income you have - not by a lot though. Could be the difference to get a few extra bucks depending on how much she earns.
    With the incomes stated, they are below the new cap threshold $186,958, so this shouldn't be a factor
    https://www.humanservices.gov.au/individuals/services/centre…

    • 

      [Deactivated] on 15/05/2018 - 09:41

      +1

      If you follow the links on that page you’ll see that entitlements are based on adjusted taxable income.

      https://www.humanservices.gov.au/individuals/enablers/adjust…

• 

  Wibbleman on 15/05/2018 - 08:54

  Just a personal opinion -
  Depends on kms and budgeting and what you want to do with it after 4 years.
  If you have to travel a lot, a package with servicing helps you spread the costs. Taking it out of your pay makes it easier as you only see your take home each week and dont have to save to pay.
  If you want to keep your car for longer than 4 years, I would purchase outright

• 

  shadmaster4 on 15/05/2018 - 09:11

  Thanks Wibbleman for your opinion..good points.

  Historically, my idea of vehicle purchases has been to only purchase when you have the cash (or can pay off loan very quickly). In the best case scenario, I can put $40k into the car without tapping into the mortgage, and then loan the remaining 20k with intention to pay off over 2 years (pay out early) or ride the wave with the novated lease and pump more into the mortgage. The big Q is whether or not Novated leasing is really worth it. I would sell the car after 4 years privately either way I go.

  Option 4 is that I buy a 1yr old prado, so the major depreciation hit is felt by the first owner.

  • 

    CLoSeR on 15/05/2018 - 10:09

    It's not worth it unless you're doing lots of driving; like commuting 2-3 hours a day for work. Many collegues with novated lease and they all seem to think the amount they take out in costs to cover fuel/servicing/tyres is not worth it unless you're doing lots of driving.

    Have you considered a cheaper alternative like Subaru Outback?

  • 

    spackbace on 15/05/2018 - 13:24

    Option 4 is that I buy a 1yr old prado, so the major depreciation hit is felt by the first owner.

    Prado doesn't depreciate like that. Once you add stamp duty to a 1yo car, you'd be pretty close to a new one. Not to mention the new update model has upgraded safety, better styling, more features.

• 

  pongky on 15/05/2018 - 09:47

  I'm looking at the numbers — how much is the fortnightly payment on that $60k car? Comparing your #1 and #3 scenarios, it seems there is only a $56 difference, so is that how much the selectus fortnightly payment is?

• 

  shadmaster4 on 15/05/2018 - 11:58

  I think people get confused because they see the novated lease finance rate significantly less than a typical loan BUT they forget to add in the balloon payment, which is nill for a bank loan and $22000 in this example for the novated lease.

  In this example i provided, I used the same figures for all RUNNING COSTS (fuel, rego etc). Keep in mind for the novated lease, a lot of it comes out pre-tax where as for the bank/home loan scenario, they are paid out after tax, and include gst.

  The selectus FN payment is $563 + residual payment $22725.
  The bank loan is $670fn + no residual.
  The home loan is $611 + no residual.

  • 

    FoxJump on 15/05/2018 - 13:54

    I have a spreadsheet I wrote to do my novated lease calculations. Pm me and I'm happy to send email over.

    I'm no financial planner. Just pedantic.

    Also .. are you comparing
    a) car with NV minus discount and minus GST
    Vs
    b) car without NV and without discounts and with GST on-top?

    Or are you comparing
    C) car with NV minus discount and minus GST
    d) car without GST for the exact same price as C but with GST on top?

    If you're doing C and D and with the 12% rate then my spreadsheet confirms you're better off buying it yourself.

• 

  Sterio on 15/05/2018 - 12:11

  If you are going to use the car for travel to and from work salary sacrifice a one tonne ute (Ranger/Hilux/Triton/Navara/Dmax) and reap the tax benefits (no FBT). For tax purposes travel to and from work is classified as business travel.

• 

  Roflcoptor on 16/05/2018 - 08:20

  Hey OP, just some quick points to consider, I might be wrong:

  Would the sale price of the car at end of 4 years cover the residual? Bonus if it's more than the residual.

  I assume you are using ecm method (contributing post tax money)? When using ecm your fbt value is completely offset so no fbt laibilty, so both taxable and adjust income should be reduced.

  And in your calcs, have you considered the interest saved on doing salary sacrifice instead of drawing down on your mortgage?