Buying EV Outright for Rebate, Then Selling to Novated Lease Company for FBT Discount

jwsc on 12/10/2023 - 12:54

Hi,

Does anyone have any experience milking all the EV benefits?
Currently in NSW where we can get:
* free stamp duty for new and used EVs under $78,000
* $3000 rebate if brought before the end of year, not eligible on novated leases
Then nationally novated leases on EVs are exempt from FBT.

I learnt recently that some companies let you lease your existing. Where you essentially sell them your car to lease back to you.
So my question is has anyone tried
* buying the EV new
* getting the rebate and no stamp duty
* selling the EV to leasing company
* leasing the EV again with no stamp duty
* paying no FBT

Also side question about leases, it says that the cost of tyres are included in your lease price, but tyres only need to be replaced every 5 or so years, and since all cars come with tyres and leases max out at 5 years, isn't this a bit of a non-starter in terms of NV benefits?

Automotive Electric Vehicle

Comments

  • fredz0r on 12/10/2023 - 13:20

    Love a good double dip!

    • spackbace on 12/10/2023 - 13:45
      +1

      That's what she said

  • FoxJump on 12/10/2023 - 13:21
    +8

    So … you pay GST on your purchase price … $7800
    to save a rebate of $3000

    *ozb membership cancelled

    keep in mind you PAY the NVL GST on your car when you buy it at the end of the lease

    • leon99 on 01/11/2023 - 16:42

      GST or not, my NVL company told me it's the same price for me whether I buy a new car from the manufacturer or a second-hand one from an individual. So the question still stands - is it legal to buy a new one, claim the rebate and then finance it via NVL?

  • jwsc on 12/10/2023 - 13:33

    hmm didn't think of GST.
    So, take the next opportunity to move to QLD,
    or pull a dodge if this guys plan actually works (https://www.ozbargain.com.au/node/786374).
    buy a Tesla model 3 or cheaper,
    try to extend lease for another 5 years at which point the car will only be worth a tiny fraction, and pay $1000 in GST

  • pharkurnell on 12/10/2023 - 13:34
    +2

    but tyres only need to be replaced every 5 or so years

    Possibly if you leave it in the shed up on bricks.

    • jwsc on 12/10/2023 - 13:35

      i stand correct, second google search says 3-5 years, so you make 1 set of tyres worth of savings…

      • pharkurnell on 12/10/2023 - 13:38

        If your tyres are lasting 3-5 yrs you must not be driving it often.

        no google, just personal experience of 30 odd years.

        • Ade99 on 13/10/2023 - 08:49
          +1

          reduce the number of traffic light burn outs may help….60,000 KM's should be possible

      • MrThing on 12/10/2023 - 14:17

        please share with me the tyres that last 5 years

        • md333 on 13/10/2023 - 14:27

          Very much dependent on usage. We have 3 cars in the household.
          One is 5 years old, 40,000km, still on original tyres.
          One is 3 years old, 55,000km, original tyres still there but not for much longer.
          One is 24 years old, but only been mine for 4 years.
          It's only done 20,000km in that 4 years and been through 3 sets of sticky tyres .

  • dtc on 12/10/2023 - 13:45

    if you buy a second hand model this works better (no GST, albeit that the 2nd hand price accounts for the new price GST inclusive amount)

    • FoxJump on 12/10/2023 - 13:52
      +1

      FBT exemption has conditions for second hand ones that you must meet

    • jwsc on 12/10/2023 - 14:20

      apparently even with second hand cars you have to pay the GST on the residual
      https://community.ato.gov.au/s/question/a0J9s0000002P6Q/p001…
      so GST and no rebate, not as worthwhile

      • FoxJump on 12/10/2023 - 16:01

        the only way to avoid paying the GST on the residual is to:
        a) buy it as a GST registered business
        b) buy it as part of ANOTHER NVL

  • Euphemistic on 12/10/2023 - 13:48

    Tyres will be factored in to the lease according to how many kms you nominate. They don’t just charge for a set of tyres at the start of the lease ‘just in case’

    • FimpBARGAIN on 16/10/2023 - 21:05

      some lease companies will let you remove items if you want, i generally like to get used rims and tyres after a few years so opted out in my last one.

  • djkelly69 on 12/10/2023 - 14:03
    +3

    Also side question about leases, it says that the cost of tyres are included in your lease price, but tyres only need to be replaced every 5 or so years, and since all cars come with tyres and leases max out at 5 years, isn't this a bit of a non-starter in terms of NV benefits?

    Tyre wear/replacement is based on kms driven, not time. So it will really depend on how many kms you drive and the expected wear rate on the tyres.

    For NL, for basically everything apart from the initial purchase cost, all the management company really does is create a budget of the expected expenses for the term of the lease, divide it by X weeks/months, and then deduct that amount from your pre-tax salary each whatever your pay period is. You then have a kitty of money sitting there which you can spend/be reimbursed from when the anticipated expenses become actual expenses.

    You should have at least some control over this budget. If you don't want to budget for any tyres or servicing or whatever else, ask them to remove it from the budget. But be aware this means if you do need something which hasn't been budgeted for, you very likely won't have enough money in your kitty for it, so you will be paying for it from your post-tax salary rather than pre-tax (and therefore missing out on one of the benefits of NL).

    • jwsc on 12/10/2023 - 14:18

      Thanks this makes a lot more sense than what I reading on the NL company websites!

  • battler on 12/10/2023 - 15:12
    +1

    selling the EV to leasing company - will incur stamp duty for them, which they would pass on to you, needs to be factored in somewhere

    • jwsc on 12/10/2023 - 16:17

      but wont it also be stamp duty exempt for them? the criteria doesn't change either way.

      • battler on 12/10/2023 - 17:51
        +1

        corrct me if I am wrong, but you are selling them a second hand car.

        • jwsc on 12/10/2023 - 19:27

          yes but its an EV
          the stamp duty exemption applies to second hand cars too

  • Brian McGee on 12/10/2023 - 15:45
    +1

    but tyres only need to be replaced every 5 or so years,

    EV's will go through tyres quicker than their market segment equivalent models due to the extra 500-1000KG battery they are always carrying.

    • Drakesy on 12/10/2023 - 17:10

      or the 200kg motor and 80kg in fuel that they're not carrying (batteries are around 500-600kg and motors a fraction of the ICE) so really it's only another 300 odd kgs. With the added benefit of regenerative breaking what you'd spend in more tyre wear you'll save in brake pads.

      • Brian McGee on 12/10/2023 - 19:17
        +2

        Regenerative braking will not increase tyre life. If OP is getting 5 years out of tyres in a conventional vehicle then they will get less from an EV in the same segment as it weighs more.

        Kia cerato GT 1370kg
        Tesla 3 1765kg

        MG ZS Excite1255kg
        MG ZS EV Excite 1570kg

        Mercedes E class AMG 2051kg
        Mercedes EQE 2558kg

    • fredz0r on 13/10/2023 - 14:30

      Since when? I just replaced mine after 80000km? It depends on how you drive and what type of roads you drive on.

      • Brian McGee on 13/10/2023 - 14:40

        Well done you, but given the same conditions with a conventional vehicle in the same class you would've gone further.

  • Drakesy on 12/10/2023 - 16:50
    +2

    Novated lease companies are really taking the mickey though, after all the tax benefits they still smash you with a 10% finance rate (and hide it in the details).

    Was initially looking at this but became prohibitive when i saw they were just taking the income tax savings and charging it at their inflated rates. If you don't have the money for a car and were going to take out finance then by all means it'll probably be cheaper in the long run. If you have the cash i'd buy it directly.

    • jwsc on 12/10/2023 - 19:33

      I came to a similar conclusion when I first started working, especially with the FBT.
      But now i'm lucky enough to be in a higher tax bracket, so combined with the FBT exemption, I need to recalcuate whether it is worth it now and if it justifies the extra cost that comes with an EV

  • MonkeyMagic1977 on 12/10/2023 - 17:15
    +3

    I've done a few novated leases over the years….few pointers below
    - Yes the interest rate of the loan is high, thats why you only want a short term lease. Ideally just do a 1 year lease only, as thats where the best gains are given the depreciation is the highest inthe first year. Only downside is your repayments will be higher.
    - Beware locking in more than 1 year at a time, should you lose your job, you still need to pay out the full term of repayments i.e. the interest the finance company was going to get over the entire lease period.
    - Best if you are on higher income so your offset the higher income tax
    - Regarding GST you only pay this on the residual value at the end of the lease, so there are savings to be had
    If you want to make further savings do the following:
    - Buy your petrol yourself (7/11), don't use the finance companies fuel card. Then just send a receipt in for reimbursement
    - Buy your insurance yourself then just send in receipt for reimbursement….Likewise buy your tyres yourself.
    Hope that helps

    • fozzie on 12/10/2023 - 22:40
      +1

      I don’t know if I agree about the 1 year. If you are buying a $50k ev car extend to the whole 5 years if you have a mortgage (which is sitting at nearly 6%), you can offset that cost. That’s about $3000 a year that you are also saving in interest (because you didn’t pay the 50k after 1 year), which would be another $12k off the price (only 1 year saves you $3k but 5 would save you 15k)

      This works with ev at least. For example base mg4 costs $318 with my company a fortnight, over 5 years. $41340 in total plus $11260 residual. Total $52600- $12000 (offsetting the mortgage ) is a total of approx $42600

      Over 1 year would cost $37184 but you would save less on road tax, service etc. So would work out about the same but with more time to spread the cost.

      • MonkeyMagic1977 on 13/10/2023 - 09:19
        +1

        What I was trying to explain is that depreciation is greatest in the 1st year of the vehicle. Given this if you are able to afford to do a 1 year lease, the tax benefits are greatest in this first year vs than the remaining years. Likewise by only locking in a year you don't expose yourself to as much risk if you lose your job. Best to look at a detailed Novated Lease calculation compared 1 to X years to see what suits you….the online novated lease summaries hide alot of detail.
        As an FYI you can also prepay future expenses with a novated lease if you are smart about it.

        • fozzie on 13/10/2023 - 14:22

          Good point! Thank you

    • geekcohen on 13/10/2023 - 08:21

      Buy your petrol yourself (7/11), don't use the finance companies fuel card. Then just send a receipt in for reimbursement

      I am interesting to know why? Is this to get discounts and rewards etc? I think it depends on the company, because my lease company just gave me a NAB Corporate Credit Card, was only $2 a month vs $2 a week for an actual Fuel Card. I could collect points on my rewards card (BP rewards) using the NAB card which was great.

      Just seems like a huge stuff around.

      Buy your insurance yourself then just send in receipt for reimbursement….Likewise buy your tyres yourself.

      Yes, that is what I used to do for insurance.

      • jwsc on 13/10/2023 - 08:47

        My guess, lets you collect points on whatever card of your choice and doesnt lock you into one particular petrol company.
        Flexibility is always the best money saver imo

        • MonkeyMagic1977 on 13/10/2023 - 09:01
          +1

          In my past experience (2 novated companies) they have provided a given fuel companies fuel card. The downside of this I found you were stuck buying at the price at the bowser on the day. By purchasing yourself seperately you can use the 7/11 fuel app to get the best price, and likewise pay on any card of your choice for points etc. Only downside is submitting the receipts for reimbursement.

        • geekcohen on 15/10/2023 - 07:31

          My guess, lets you collect points on whatever card of your choice and doesnt lock you into one particular petrol company.

          My card was for any fuel station that accepted that fuel card. Also often got a discount on the fuel as well when looking at my statements because it was a fuel card. It might've been $2 per fill up, but still a bit of a discount.

  • geekcohen on 13/10/2023 - 08:22

    since all cars come with tyres and leases max out at 5 years, isn't this a bit of a non-starter in terms of NV benefits?

    Depends on how many kms you travel per year and what roads plus car etc. I have almost done 45,000kms in 1.5 years, I will be up for a new set of tyres in the next 6 months I reckon. I'll see at my next service in a few weeks what they say.

  • jrvb42 on 13/10/2023 - 12:31

    You could buy a normal vehicle for less and salary package that.
    Invest your savings until 2 things happen:
    1. Your future electric vehicle comes down in price
    2. Your future electric vehicle can be charged by non-fossil generated electricity (or you have - and can use - solar to charge your vehicle during the day).

    • fozzie on 17/10/2023 - 22:50

      Salary packaging a cheap petrol vehicle costs only a little less than a better Ev Example: mg3 is $290 a fortnight over 5 years (presuming 5k) Residual is $5700= $43400 total
      Mg is $317 and residual is $11260=53640 total
      So approximately $10k but if you drive more bigger savings as electricity is much cheaper. If you charge home even with no solar it’s about 30c per kw.
      At the end of the 5 year you have a more expensive car. Mg3 is about $17500 for base model while mg4 just under 40k.
      At the end of the leas you could sell for at least 20k (depending on conditions). While mg3 I’m not sure if it’d be worth $7-8k.

      I think an ev car is worth (as they are at least 40k) salary packaging because of incentives.

      I have been using smart salary to find these quotes.

  • SmileSydney on 30/11/2023 - 17:44

    Has anyone submitted the NSW EV rebate claim lately? How long did it take?

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