Looking for a Novated Leasing Company? - Email Matt Sutianto from Novated Lease Australia: matts@nla.com.au and be sure to mention Tom from Ludicrous Feed Spreadsheet seen in this video (courtesy of viewer Chris Q): docs.google.com/spreadsheets/d/114l9XsQtgU7QCY1twfoVfxe4Yh8FHQmDbYuMQo-K6mo/
I have novated leases on many cars over the years, novating has been excellent with ICE vehicles not only financially but also convenience (Fuel Cards saved me a few times!). I ran the numbers on a new Model 3 and was really impressed with the benefits financially, the government rebates are excellent. Thanks for an awesome video, well explained!
@@green___apple I just did the calculations on a $55K MX-5 and over 3 yr and 5 yr lease terms and leasing is cheaper...not by much over 5 years, but material enough for 3 years to make it worthwhile - even with the post tax contribution; but the FBT exemption on EVs is massively better.
But leasing will have a finance expense - basically you have to pay interest on the car loan the leasing company gives you to buy the vehicle. That’s usually at an effective rate of about 5 to 6 p.a. so this eats into your “investment” returns.
@@djwhu77 But that expense is already part of the calculation so there's no additional costs. Mario is right, you'll have the funds that otherwise would have been spent on purchasing the car outright to further invest and potentially get more money from.
@@xTheITx It depends on your situation i.e milage may vary, if you can get agl rates for overnight charging (8c/kwh) you will be flying in the green, also if you are talking about novated leases they dont have intrest, so novated may be the way to to go for most situations obviously that means you dont outrite own the car, but also you have more money to invest up front which is great
You can use a combination of the Toyota Novated Lease calculator + paycalculator to figure out your after tax hit. I'm in the 32.5c bracket and it's still looking like a good option.
While the benefits outweigh the downsides there are a few to consider when novated leasing: 1. The interest rates are inevitably higher on a novated lease than a consumer loan and fixed for the term. 2. A finance lease (novated lease) is not like a traditional loan - the interest is capitalised up-front - i.e. on day 1 of the lease you owe the entire lease amount plus all of the calculated interest on the loan and you normally don't break even with the purchase cost until well into the lease let alone cover the depreciation - ending early is not usually a viable option, e.g. if you purchased a car for $60,000 and there was $15,000 interest on the loan over 4 years then on day 1 you owe the entire $75,000 and every payment is treated as a capital reduction, there is no reducing interest, after paying off your loan for 12months with a 37.5% residual you would still owe $62,000 and after 2 years $49,000 it's not normally until well into the 3rd year of a 4 year lease that an exist becomes less onerous. 3. You will need to sell the car or take out another loan to pay the residual - you may end up owing more than the car is worth (or make a profit depending on the market for your car). You really have to remain in the lease for a substantial proportion of the term otherwise the penalties are high, this normally means continuing to pay the lease out of after tax money if circumstances change (i.e. you lose your job or move to a job that does not offer novated leases etc), if you haven't had the lease long then this could be worse than a consumer loan.
Yes, I don't understand why the loan percentage wasn't included in the spreadsheet - in QLD, they're 12% per year, so a car valued at $58,000 (the above example) would pay 580 per month over 36 months equals $20,880 (a five-year lease would be $34,800) - are you saying there are no loans required in Vic? This to me is the main drawback from novated leases, whereas if you have a home loan, it could be cheaper to draw down from that as the rates would be about half of the above ($12,180 over three years on 7% loan). So your overall savings would be closer to $5k in that spreadsheet if you had a loan and all other figures were correct. But leases would be more attractive if you don't have a home loan or didn't have to pay the lease loan, which I'm sure you would? How else would they fund the lease or make a profit? I doubt all they'd need is $16 per month to operate as a business?
Thank for this video! I having been looking at getting an EV on a novated lease and have seen the estimations from the leasing company but never know quite how much to trust it. Also +1 for sharing the spreadsheet publicly if possible - would be great to be able to see it with my own costs.
Great vid! JUST MAKE SURE YOU STRIP THE NOVATED LEASE OF THEIR INSURANCE AND PAINT PROTECTION. BRINGS THE WEEKLY REPAYMENT DOWN A CRAP TONNE 👌 THATS WHERE THEY GET YOU!
I’ve been getting quotes and have noticed the insurance quotes seem to high. Had it on my list to get my own quotes. You’ve just confirmed my thoughts. Thanks.
My novated lease provider added in paint protection and an insurance option that was twice that from NRMA. Total scam so I stripped those out, saving 3k!
Very good info, Some lease providers will try to include expensive paint protection in the package which will increase the fixed interest loan amount. I guess it will be good to avoid that.
Just a note that in NSW you can't have the rebate on a novated lease. There's also no stamp duty on EVs Depending on your salary, it can make it a no brainer to get a EV on novated lease
If you consider the below, your savings are even greater 1. Not having to fund $60k upfront 2. Gst exemption 3. Sale of your current car (in lump sum) since youll be replacing with EV and your current running which are all paid POST tax and INCLUSIVE of GST. 4. Optional sale of model 3 at end of novated lease period for higher than the conservative ATO residual value via private sale arrangement
Thanks Tom very useful. But once stage 3 tax cuts come in from 24-25 savings for anyone earning under $200,000 will decrease significantly from the figures here (most Australians will pay a 30% tax on their income between $45,000 and $200,000. Haven’t worked it out exactly but would it then be worth the hassle of a novated lease? Still probably worth it for very high income earners.
@@LudicrousFeed my really rough calculations suggest $7-8,000 less savings over a 3 year lease on upfront and running costs in the new tax bracket. That still provides some ($10,000) upfront relief and may help avoid financing costs etc if you don’t have all the cash in hand for an outright purchase. Love someone to fact check me!
Great information. Can you expand more on the review in 2027? What will they take into consideration, and do you think this exemption will still be around until then?
Highly recommend you request this from your Novated Lease provider. It makes no sense to pay for maintenance on a car that doesn’t need it. But do consider bundling Insurance as you will save money paying with pre-tax dollars.
I'll have to check with Chris to seek his permission. If he's agreeable then perhaps we could convert it to a Google Sheet where users can propagate with their own costs
For anyone in NSW, just note the $3K EV rebate does not apply to cars bought under a novated lease agreement, so you save on the GST but lose out on the rebate.
@@lanc3779 true, but in my circumstances the savings were far greater than the $3k rebate. Also, novated leases benefit isn’t only the GST but lowering your taxable income (saving on tax)
@@walrusgumboot No worries. Just clarifying because in the video he included the $3k rebate for the calculation, which I assume the rules are different in VIC than NSW.
Great breakdown! Do you know if it’s possible to just end the lease early and turn the car over to the financier? This is something that used to be touted by salary sac companies but I haven’t looked into it.
Hi Tom, Thanks for posting the video. I'm still trying to get my head around this Novated lease. So my company goes through a particular Novated lease company, they have quoted me based on a BYD extended with metallic paint option as out of pocket $505 per fortnight on a 5yr lease. After 5 yrs the total cost including residual and running cost is approx $80500. The BYD dealer said that my fortnightly payment if I was to buy it privately would be approximately $520 per fortnight on a 5 yr contract. This would equate to $67600. If I was to add in running cost for the 5yrs (assuming $1200 for insurance $1000 for rego and $600 for maintenance per year) $67600 + $14000 = $81600. This indicates that I'm only saving approximately $1100 for the 5 yrs if I was to go for the Novated lease option. I would of thought that the Novated lease would produce more savings. Am I missing something?
There are other factors that come into play eg your marginal tax rate, length of lease, current cost of finance, running costs etc I recommend looking at the Google sheet link and plugging your figures to get an estimate of your savings
Although the savings seems 1100$ but you save majority of your money on your tax. As you pay some amount from pretax money…you save money on tax. Go through your numbers again but this time, include taxation.
Like any lease, interest is payable on the loan to purchase the car, which doesn't seem to have been included in this study. Am I missing something here?
A handy comparison is to split the net amounts to repayment amount ex-tax, budget amount ex-tax (which the surplus is returned with tax applied) add on the baloon. Then compare that to a straight loan repayment amount at an equal interest rate. Across the life of loan. The results are quite astounding. Even with the budgeted costs disregarded.
Thanks Tom for the great video as always. Huge thank you to Chris for the calc. Hi Tom, this is what I need a worksheet, can you please drop a copy of the spreadsheet if possible 🙏
Thank you for the video. Been keen to look at an Ioniq 5 in NSW on novated lease Was confused that some companies ask you to nominate a budget for maintenance Costs etc. So was a bit confused
Yes you have to nominate how much you think you’ll spend. See what Hyundai’s scheduled costs are for the Ioniq 5. Don’t forget to include possible tyre change too
I would like to see this done over 3 car changes private vs lease. The residual will reduce you 2nd car purchase by 46.88% which makes the maths very different. If you can live without keeping up with the Jones, not buy a big car and basically run them out longer the difference is likely bigger. Having said that if you do anything work related it is likely better to lease.
I'll have to check with Chris to seek his permission. If he's agreeable then perhaps we could convert it to a Google Sheet where users can propagate with their own costs
I believe they are fixed, as it’s calculated over the whole term at beginning of contract which you then owe to pay off in set instalments via pretax payroll deductions. If rates go down you don’t get any benefit, so if you think that will happen soon in a significant way, maybe wait for that or go for a shorter lease term. That will lead to higher repayment instalments so less take home pay but more total tax savings apparently. Check all this with your tax advisor and novated lease firm(s) though as its just what I’ve understood from my research in considering this for myself
I would be interested in doing the numbers now since interest rates have risen so much last year you could secure novated leases at 3% but now it’s over 10% not sure how accurate this case study would be today
I went through this exercise recently, and it was still -just- better than cash. If you needed financing and used a traditional loan, then it's a no brainer. It even beat out the EV specific loans at 5.5% by an impressive margin.. However you do need to shop around. My quote was less than 10% (say around 9.5%), but most companies were charging in the 15% area and a few were charging nearly 20%!! So if your employer has an exclusive contract with a lease provider, you're probably screwed. But if not, there are smaller players who are quite hungry for contracts.
True but the cost of borrowing in general has gone up. So the opportunity cost of paying cash is the loss of offsetting a mortgage with a higher interest rate. Personal loan rates will have gone up too. Pays to shop around with some of the smaller leasing companies
I'll have to check with Chris to seek his permission. If he's agreeable then perhaps we could convert it to a Google Sheet where users can propagate with their own costs
Appreciate for the explanation mate, just a quick question, since NL will technically reduce your pretax salary, does that reduce the amount of your superannuation contribution by employer as well?
So curious what the residual is on a 5yr lease then, is that available somewhere as this spreadsheet looks familiar like the one I saw on FB shared by someone there who built it. I know my residual which I don't have to pay as I will hand the car back and they will sell the car at auction and anything above the residual of about $10k(yes it's an BEV) I get given or I can buy it with the balloon payment and sell privately.
Leasing for a shorter amount of time reduces the time you're paying interest on the loan, just like with a mortgage. Repayments do get smaller, but the total cost will be bigger
@@eight10man With a lease it works out to about the same from my calculations if it's 5 or 3 years. Just raw numbers, a 3 year lease is $51,000 and a 5 Year is $56,000. If you add on two years of Rego and Insurance for the 3 year lease (that would normally be bundled into the 5 year lease) then they are almost the same price.
Thanks for breaking this down! Great video, however I'm still confused at which point he saved money on this lease for an EV compared to a ICE vehicle? e.g. if he bought a comparible ICE vehicle for say $50K or less what would be the cost of FBT on this type of car?
I'll have to check with Chris to seek his permission. If he's agreeable then perhaps we could convert it to a Google Sheet where users can propagate with their own costs
The biggest issue is, no one wants to buy a used EV. I have seen multiple UK/US owner vids that have used these cars for 3 years and most car dealerships will not trade anything older than the latest generation. When a new generation EV comes out to fix all the issue from the previous model, the trade-in/selling price plummets dramatically. They are essentially a throw away mobile phone. The other issue is if you have an EV car that is having issues, most mechanics are not familiar with this car and will cost you a fortune to repair (unless its under warranty).
I still see mobile phone repair shops around town 😉 But yes in all seriousness, the used car market boils down to simple price/demand economics. If people want the car eg Tesla/BYD, their resale value will be retained as opposed to a less desirable car where their resale may not be as good. Also, some years will also be better than others so it’s always good to do some research when buying used 🙏
UK and US videos about residuals in the used market don't mean squat in our closed market. Used vehicles of any kind in Australia in general hold their value quite well. In the UK in particular used vehicles of any kind and especially luxury vehicles, have always had horrendous depreciation. Used Tesla's have often still got a decent warranty period left on their battery in particular. I'm considering one myself but I'll struggle to find any Tesla for less than 30k even for a higher mileage example.
Would a 1year lease be worth it, so not to be under a longer term finance? And then after 1y one can opt to buy it out, redo the lease or sell and get another one?
I'm curious about this as well, especially in an environment of falling interest rates. I suppose the immediate downside is the weekly payments would be higher to cover the interest portion sooner - still, I'd be interested to see the cost v. benefit analysis on this!
In NSW, is it possible to buy the EV outright to take advantage of the rebate, then sell the car to Novated Leasing Company for Salary Sacrifice? My Novated Leasing Company told me they can buy your second hand car from you for NL, so in theory I think this will work. I wonder if anyone has done it OR if anyone can see any glaring fault in my logic?
I’d assume if this was possible they would probably offer you lower than original purchase price even with the rebate before leasing it back again to you with added interest? I’m just taking an educated guess 🤔
You would lose the benefit of saving on the GST of the initial purchase price of a new car if you did it this way, which is higher than the $3000 rebate.
@johnlambert1744 I've been told by the NL company that they would agree a retail price (incl GST) with me as purchase price from me. Then the lease principle amount would be the purchase price less GST.
@@fushengwang6637 Yes but you have still lost the benefit of GST. If you buy the car outright - say it's $50K + $5k GST = $55k you need to pay the $55k upfront, there is no GST input tax credit for you unless you are registered for GST (i.e. a sole trader etc.) then it might work, otherwise not.
Hi Tom thanks for the comparison. My current ICE vehicle is with Novated lease with a little more over 1 year lease to go. Still deciding if I should transition to EV for my next car. I have seen some video on youtube how some EV car and buses suddenly burst into flame and burnt down the vehicle pretty quickly. How safe are the new generation EV battery?
Statistics show that EV fires are far less common than ICE fires and generally will only occur if there is traumatic injury/damage to the battery eg penetration or water inundation
Tom, research the different types of battery chemistries used by different makers. You might hear of LFP which is almost fire-proof, compared to NMC for example. EV fires are rare but almost impossible to extinguish vs petrol fires which are common but more easily handled.
True that LFP fares better. Difficult to extinguish but I wouldn’t say almost impossible, the recent Model 3 fire on the Hume Hwy NSW was put out in 30mins reportedly (Sep 2023)
True but the cost of borrowing in general has gone up. So the opportunity cost of paying cash is the loss of offsetting a mortgage with a higher interest rate. Personal loan rates will have gone up too.
Hi Tom thank you for that information. Do you think you can clear up if ev's are gst free how do you claim this back if you pay for your car outright. Should it be removed from contract and the car yard collects the refund. ?
EVs aren’t GST free if you buy outright. In some states they are stamp duty exempt and may also attract an additional rebate depending on the threshold
Technically no, but there is a loophole - if you can find the cash or short term bridging finance that is not too expensive (say home equity etc) then you can purchase the car in your name, claim the rebate and a month or so later put the car into a novated lease scheme - it's absolutely legal, the only disqualification under the NSW EV rebate is that the car cannot be first purchased under a novated lease scheme, there is no disqualification / payback required if the car goes into a novated lease after the rebate has been paid even if this was the intention all along.
Just did this with RemServ and what a total ponzi scheme! Good luck claiming your home charging. The entry costs to do so totally overwrite the tax gains. Also I love that RemServe sent me a fuel card which is no use to a model 3- who pays the charges for that? Don’t get me started on having to pay $7 a fortnight so that RemServe can pay directly for regular maintenance like servicing …. Um what servicing!? Absolute money grab!!!!
Salary packaging can always be customized. You can find your own car. And the salary packaging company will purchase the car. Let them know how much maintenance/ insurance you want to pay per year. This will reduce the monthly payment.
You just have to tell them you don’t want it and send them to the ATO guidelines for claiming charging reimbursement. Most reps seem to know very little about EVs or their own guidelines but it’s possible if you insist and push back. Have successfully fought this twice with two novated leasing companies
My 14k Nissan leaf from 4 years ago has paid itself off in fuel savings , now its just insurance , 80c a day for off peak EV rates, tyres , rego. EV prices are falling day by day, i see little use for a new car, ill never pay it off in petrol savings. For me ill just keep buying second hand leafs.
@@LudicrousFeed - I still get 120km per charge - perfect for the city. 10% range drop in 4 years , so down to 75% , ill keep rolling as long battery does . 0-100 in 5.7 :) its had some upgrades :) sits on coil overs and fat tyres , a fun little city pocket rocket. Fits the greyhounds in the back - huge boot space :) ill grab a second hand Y or a exc30 dual motor next :)
We went 3 years for our Model Y in Vic but got a lower residual due to doing approx 40,000km a year. Our lease provider also accepts the 4.2c per km which is better than our true cost of 3c per km so far over 26,000km.
So the residual amount is locked in from the start? What if by the end of 3 years, and you ended up with much lower km to 40km, will they keep the initial agreed residual amount
@@deanphung7018this is why it’s important to nominate the kms driven per year as accurate as possible, mainly for your own benefit. This is why some people go on long road trip/holidays with their car (towards the end of the year) to make up the extra KMs they overestimated ! :)
Interesting to see how much of the tax-payer funded subsidy goes to the novated leasing companies vs the actual incentive for EV buyers, particularly those in the median tax bracket ;)
@@LudicrousFeed That was meant more as a statement than a question, because those forgone tax numbers are already unpacked/implicit in the spreadsheet. Entering the 34.5% median marginal tax rate into the spreadsheet template gives forgone Cwth/Federal revenue of ~$18k (in reduced income tax) and ~$6k of forgone State GST funding (plus Cwth costs of implementing and enforcing the policy): of that the EV buyer gets ~$10k net tax savings and the novated leasing company gets the remaining ~$14k benefit (out of which they would return some amount in taxes). So more of a novated leasing incentive than an EV incentive (given the assumptions in the spreadsheet and if I have summed up the forgone taxes correctly).
Excellent video, good and straightforward explanation of benefits of Novated leaseing. Question, When you say the True Cost is only $783.36 pm, is that what will be deducted from monthly pay?
I struggled to understand this as well - the figure is the difference between the amount that your employer pays towards the lease (pre-tax), versus the amount you would have received in your bank account if you didn't have a lease (post tax). I hope that helps!
How do the numbers stack up when Elon keeps dropping the price of new cars after to start the lease? The ballon payment maybe $10000 more than what the car is worth on the used car market.
Can a vehicle be novated leased for three consecutive 1 year periods with 65% balloon each time to achieve a lower balloon amount after 3 years? Applying this approach would achieve balloon of purchase price x .065 x 0.65 x 0.65 or balloon of about 27.5% after 3 years.
Thank you! Please feel free: Use my referral link to purchase a Tesla product and get cash off and other exclusive benefits: www.tesla.com/en_AU/referral/thomas7208
Excellent point. In this spreadsheet you can adjust the marginal tax rate. If I get permission, I’ll aim to convert this to a Google sheet so viewers can plug in their own info
There is a more adjustable Google spreadsheet doing the rounds on Facebook Tesla owners groups created by Chang Yang Yew 2024 39% Tax/Medicare brackets changes are reflected in the calculations as well (they are dropping so some of the savings pre-tax will drop 2024/2025 FY onwards) Worth mentioning a trick would be an example say a 2 year lease as a 25 month lease so you can claim the next year's running costs prior to your lease ending, if you plan on keeping the car after the lease ends (Helps eek out a few more savings if you time everything correctly) Rego + Insurance + tyres + cabin filters
All looks good except my employer s novated lease interest rate is 12% after tax lease interest rate I got quoted 6% meaning all the savings are swallowed up by the greedy finance company and their cosey relationship with the employer no saving is passed on to the actual employee.
I know you you made the caveat that these numbers are just for entertainment but I think there are a couple of things missing from the non lease calculation. As this is a company car the running costs are tax deductible, additionally you can also deduct the depreciation of the vehicle - I believe this is around 20% per year. Is it possible to redo that spreadsheet and add in those components.
There is no way depreciation claim is allowed by ATO in novated leasing arrangement, simply because the logic is that the car is leased by the employer, not the employee.Always check with your tax accountant.
@@roosiekcj Correct no depreciation for a novated lease. But if you have a company vehicle outside of a Novated lease, you can legitimately claim depreciation in AUS. Upto 20% per year. The exact amount will be determined by your accountant and how much you use the car for business.
Thanks for the video. We went with a 36 month novated lease on a Model Y RWD. For my own piece of mind I worked out the different in costs over a 4 year period comparing a Model Y RWD (~$70k vehicle) vs keeping a one year old ICE Diesel SUV (~$55k vehicle). After 4 years the two vehicles break even due to the much higher running costs of the the ICE Diesel and the lower total costs of a Novated Lease. I found it a worthwhile exercise to compare what kind of ICE vehicle compares purely on cost with what kind of EV you can get.
Just remember you don’t own the asset ( car) on a novated lease until the end of the lease term and residual payment made. So if you are applying for a home loan, a novated lease will certainly go against you and your borrowing power.
"savings"... what's basically happening here is the money is coming out of governments pocket to the lease companies pocket. You still end up paying way more for the car if you did buying cash or in many instances if you have just found a better interest rate...
TL;DR: Owning a car outright as an asset was better for me personally, than having it hang over my head for the next 4-5yrs 😬 CONTEXT: I was gonna do this, even emailed Tom peak freakout few months back (cheers for replying mate 🙏🏾). I wanted all the those tax benefits/savings, but wanted to pay it off with the shortest lease... I got denied 😓 I had the cash to straight up buy the car... but I wasn't allowed to lease it for less than 4yrs due to my low income. 4-5years is a big/long commitment to have. So much can change, esp if you change jobs, interest rate rises, wars, who knows. If someone's rent/repayments went up (as they all did) you're pretty screwed from borrowing any money or refinancing. Novated leases work best for high income earners in higher tax brackets, where your reduced income isn't going to affect your borrowing capacity (which was my concern) and you're saving significantly more on expenses. Sure you save more with longer leases, but if you can afford it, I'd own it sooner.
The ATO website says the review will be complete in mid-2027 (The legislation allows the review to take 18 months from the end of 2025, three years after the legislation was passed). www.ato.gov.au/Business/Fringe-benefits-tax/Types-of-fringe-benefits/fbt-on-cars,-other-vehicles,-parking-and-tolls/electric-cars-exemption/
Great video! Can you elaborate on RFBT affecting means testing for FTB and family payments? Sort an accountant, but they weren't up to speed with it. I'd love an ev on lease, but not if I lose my benefits for little gain or loss.
Disclaimer: please seek professional financial advice before proceeding … but from what I have read, novated leasing will reduce your taxable income as it is deducted from an employee’s pre-tax salary. This will reduce child support payments as this is calculated based on taxable income.
Looking for a Novated Leasing Company?
- Email Matt Sutianto from Novated Lease Australia: matts@nla.com.au and be sure to mention Tom from Ludicrous Feed
Spreadsheet seen in this video (courtesy of viewer Chris Q):
docs.google.com/spreadsheets/d/114l9XsQtgU7QCY1twfoVfxe4Yh8FHQmDbYuMQo-K6mo/
No referral for model 3?
@@nashimulreshad1397 apparently not
I have novated leases on many cars over the years, novating has been excellent with ICE vehicles not only financially but also convenience (Fuel Cards saved me a few times!). I ran the numbers on a new Model 3 and was really impressed with the benefits financially, the government rebates are excellent.
Thanks for an awesome video, well explained!
Pleasure 🙏
Isnt it more expensive if you pay pre tax, post tax and 20% plus residual?
@@green___apple I just did the calculations on a $55K MX-5 and over 3 yr and 5 yr lease terms and leasing is cheaper...not by much over 5 years, but material enough for 3 years to make it worthwhile - even with the post tax contribution; but the FBT exemption on EVs is massively better.
And the money you did not spend on buying the car up front could be invested. Thus further increasing the gains.
But leasing will have a finance expense - basically you have to pay interest on the car loan the leasing company gives you to buy the vehicle. That’s usually at an effective rate of about 5 to 6 p.a. so this eats into your “investment” returns.
@@djwhu77 But that expense is already part of the calculation so there's no additional costs. Mario is right, you'll have the funds that otherwise would have been spent on purchasing the car outright to further invest and potentially get more money from.
@@xTheITx It depends on your situation i.e milage may vary, if you can get agl rates for overnight charging (8c/kwh) you will be flying in the green, also if you are talking about novated leases they dont have intrest, so novated may be the way to to go for most situations obviously that means you dont outrite own the car, but also you have more money to invest up front which is great
You can use a combination of the Toyota Novated Lease calculator + paycalculator to figure out your after tax hit. I'm in the 32.5c bracket and it's still looking like a good option.
While the benefits outweigh the downsides there are a few to consider when novated leasing:
1. The interest rates are inevitably higher on a novated lease than a consumer loan and fixed for the term.
2. A finance lease (novated lease) is not like a traditional loan - the interest is capitalised up-front - i.e. on day 1 of the lease you owe the entire lease amount plus all of the calculated interest on the loan and you normally don't break even with the purchase cost until well into the lease let alone cover the depreciation - ending early is not usually a viable option, e.g. if you purchased a car for $60,000 and there was $15,000 interest on the loan over 4 years then on day 1 you owe the entire $75,000 and every payment is treated as a capital reduction, there is no reducing interest, after paying off your loan for 12months with a 37.5% residual you would still owe $62,000 and after 2 years $49,000 it's not normally until well into the 3rd year of a 4 year lease that an exist becomes less onerous.
3. You will need to sell the car or take out another loan to pay the residual - you may end up owing more than the car is worth (or make a profit depending on the market for your car).
You really have to remain in the lease for a substantial proportion of the term otherwise the penalties are high, this normally means continuing to pay the lease out of after tax money if circumstances change (i.e. you lose your job or move to a job that does not offer novated leases etc), if you haven't had the lease long then this could be worse than a consumer loan.
All worthy considerations, thanks for highlighting 👍
Thanks @TB-up4xi.
Users also need to read the fine print in the event of a total loss.
This is brilliant, I really hope that the govt provides direct subsidy for equitable access than via sneaky and complex leasing schemes.
Excellent advice!! Sticking with a lease is very challenging as circumstances change.
Yes, I don't understand why the loan percentage wasn't included in the spreadsheet - in QLD, they're 12% per year, so a car valued at $58,000 (the above example) would pay 580 per month over 36 months equals $20,880 (a five-year lease would be $34,800) - are you saying there are no loans required in Vic? This to me is the main drawback from novated leases, whereas if you have a home loan, it could be cheaper to draw down from that as the rates would be about half of the above ($12,180 over three years on 7% loan). So your overall savings would be closer to $5k in that spreadsheet if you had a loan and all other figures were correct. But leases would be more attractive if you don't have a home loan or didn't have to pay the lease loan, which I'm sure you would? How else would they fund the lease or make a profit? I doubt all they'd need is $16 per month to operate as a business?
Thank for this video! I having been looking at getting an EV on a novated lease and have seen the estimations from the leasing company but never know quite how much to trust it. Also +1 for sharing the spreadsheet publicly if possible - would be great to be able to see it with my own costs.
Glad it was helpful!
I just went through this process to purchase a 2023 M3. (I pick it up in 2 weeks)
Definitely worth doing over purchasing outright.
Great vid! JUST MAKE SURE YOU STRIP THE NOVATED LEASE OF THEIR INSURANCE AND PAINT PROTECTION. BRINGS THE WEEKLY REPAYMENT DOWN A CRAP TONNE 👌 THATS WHERE THEY GET YOU!
Or you can get it reimbursed later I suppose
I’ve been getting quotes and have noticed the insurance quotes seem to high. Had it on my list to get my own quotes. You’ve just confirmed my thoughts. Thanks.
I got different quotes and there was only like $5 difference
My novated lease provider added in paint protection and an insurance option that was twice that from NRMA. Total scam so I stripped those out, saving 3k!
Very good info, Some lease providers will try to include expensive paint protection in the package which will increase the fixed interest loan amount. I guess it will be good to avoid that.
Just a note that in NSW you can't have the rebate on a novated lease. There's also no stamp duty on EVs
Depending on your salary, it can make it a no brainer to get a EV on novated lease
Correct. No EV rebate if novated lease. But Stamp Duty exemption still applies as long as below threshold
Tom, as always, your video is fantastic. Chris, a big thanks for the Spreadsheet.👍
Glad you enjoyed it 🙏
If you consider the below, your savings are even greater
1. Not having to fund $60k upfront
2. Gst exemption
3. Sale of your current car (in lump sum) since youll be replacing with EV and your current running which are all paid POST tax and INCLUSIVE of GST.
4. Optional sale of model 3 at end of novated lease period for higher than the conservative ATO residual value via private sale arrangement
All good points 🙏
May I know a little bit more about the point 3 please? or where can I find about this information regards to lum sum in current vehicle? Thank you.
So thorough and clear. Thank you so much.
Pleasure 🙏
Thanks Tom very useful. But once stage 3 tax cuts come in from 24-25 savings for anyone earning under $200,000 will decrease significantly from the figures here (most Australians will pay a 30% tax on their income between $45,000 and $200,000. Haven’t worked it out exactly but would it then be worth the hassle of a novated lease? Still probably worth it for very high income earners.
I’d have to redo the calcs when the brackets change
@@LudicrousFeed my really rough calculations suggest $7-8,000 less savings over a 3 year lease on upfront and running costs in the new tax bracket. That still provides some ($10,000) upfront relief and may help avoid financing costs etc if you don’t have all the cash in hand for an outright purchase. Love someone to fact check me!
Great information. Can you expand more on the review in 2027? What will they take into consideration, and do you think this exemption will still be around until then?
On my lease, I told them I wanted no servicing costs as there are none on a Tesla in warranty.
DIY filter changes? 😁
Highly recommend you request this from your Novated Lease provider. It makes no sense to pay for maintenance on a car that doesn’t need it. But do consider bundling Insurance as you will save money paying with pre-tax dollars.
$100 / year for windscreen wipers and filters and even though it's not a lot, you can get the gubmint to pay some of it :p
I wonder if you could do this for a small business?
Great work, that keeps-you to you both.
Hey Tom, any chance you can link to this excel? I would like to share it with colleagues and allow them to place their own costings in it.
I'll have to check with Chris to seek his permission. If he's agreeable then perhaps we could convert it to a Google Sheet where users can propagate with their own costs
Yep, I decided to go novated lease after seeing the savings vs paying outright. It’s a huge benefit if your employer and circumstances allow
For anyone in NSW, just note the $3K EV rebate does not apply to cars bought under a novated lease agreement, so you save on the GST but lose out on the rebate.
@@lanc3779 true, but in my circumstances the savings were far greater than the $3k rebate. Also, novated leases benefit isn’t only the GST but lowering your taxable income (saving on tax)
@@walrusgumboot No worries. Just clarifying because in the video he included the $3k rebate for the calculation, which I assume the rules are different in VIC than NSW.
Great breakdown! Do you know if it’s possible to just end the lease early and turn the car over to the financier? This is something that used to be touted by salary sac companies but I haven’t looked into it.
Hi Tom,
Thanks for posting the video. I'm still trying to get my head around this Novated lease.
So my company goes through a particular Novated lease company, they have quoted me based on a BYD extended with metallic paint option as out of pocket $505 per fortnight on a 5yr lease. After 5 yrs the total cost including residual and running cost is approx $80500.
The BYD dealer said that my fortnightly payment if I was to buy it privately would be approximately $520 per fortnight on a 5 yr contract. This would equate to $67600. If I was to add in running cost for the 5yrs (assuming $1200 for insurance $1000 for rego and $600 for maintenance per year) $67600 + $14000 = $81600.
This indicates that I'm only saving approximately $1100 for the 5 yrs if I was to go for the Novated lease option.
I would of thought that the Novated lease would produce more savings. Am I missing something?
There are other factors that come into play eg your marginal tax rate, length of lease, current cost of finance, running costs etc
I recommend looking at the Google sheet link and plugging your figures to get an estimate of your savings
Bao, some novated lease covers rego and road aside assistance- I believe.
Although the savings seems 1100$ but you save majority of your money on your tax. As you pay some amount from pretax money…you save money on tax. Go through your numbers again but this time, include taxation.
@@ravikumavat4230 What is your company doesn’t offer salary sacrifice? How will you then save money on tax?
What if*
Good info. This is something to bear in mind for government workers especially.
What if you change jobs every 2 years?
@@foxtrot762 Once you get a Government job, you can never leave.
Like any lease, interest is payable on the loan to purchase the car, which doesn't seem to have been included in this study. Am I missing something here?
Built into the repayments
Can we compare the saving to buying outright under a business and claim the FBT saving versus a novated lease.
Yes this interests me. I have $53k ATO cash assistance to use
Thanks Tom and Chris
Pleasure 👍
Thank you for the spreadsheet Chris, and for explaining it Tom! Much appreciated :)
My pleasure!
A handy comparison is to split the net amounts to repayment amount ex-tax, budget amount ex-tax (which the surplus is returned with tax applied) add on the baloon. Then compare that to a straight loan repayment amount at an equal interest rate. Across the life of loan. The results are quite astounding. Even with the budgeted costs disregarded.
Great info and not to much advertising with latest content good work keep it up.
Thanks Tom for the great video as always. Huge thank you to Chris for the calc.
Hi Tom, this is what I need a worksheet, can you please drop a copy of the spreadsheet if possible 🙏
I have permission from Chris! Check pinned comment and video description for spreadsheet link
Thank you for the video.
Been keen to look at an Ioniq 5 in NSW on novated lease
Was confused that some companies ask you to nominate a budget for maintenance Costs etc. So was a bit confused
Yes you have to nominate how much you think you’ll spend. See what Hyundai’s scheduled costs are for the Ioniq 5. Don’t forget to include possible tyre change too
He doesn't need to pay GST via novated lease I think max $6191 (2023) too which is a saving as well, 2022 I think is a bit lower than that
Additional gains from keeping cash in bank or offset account.
Yes
I would like to see this done over 3 car changes private vs lease. The residual will reduce you 2nd car purchase by 46.88% which makes the maths very different. If you can live without keeping up with the Jones, not buy a big car and basically run them out longer the difference is likely bigger.
Having said that if you do anything work related it is likely better to lease.
Long term project for sure
Are you able to share to document so viewers can plug in their own figures?
I'll have to check with Chris to seek his permission. If he's agreeable then perhaps we could convert it to a Google Sheet where users can propagate with their own costs
Would also love to have a go at it.
Hi Tom, thanks for sharing. Could you share the excel file? Thanks
Once I get permission I will share 🙏
appreciate the spreadsheet analysis mate, thanks heaps, will guide me in whether to purchase one or not
Pleasure
Great vid, appreciate the time taken to run through in detail.
Pleasure
Great video thx! Question: What if interest rates drop during the lease, does loan repayment hence the lease payment change if that happens?
I believe they are fixed, as it’s calculated over the whole term at beginning of contract which you then owe to pay off in set instalments via pretax payroll deductions. If rates go down you don’t get any benefit, so if you think that will happen soon in a significant way, maybe wait for that or go for a shorter lease term. That will lead to higher repayment instalments so less take home pay but more total tax savings apparently. Check all this with your tax advisor and novated lease firm(s) though as its just what I’ve understood from my research in considering this for myself
Very very helpful video. Thank you
Pleasure
I would be interested in doing the numbers now since interest rates have risen so much last year you could secure novated leases at 3% but now it’s over 10% not sure how accurate this case study would be today
Agree. I think the monthly cost to your salary on a BEV of this value is closer to 1000 now due to interest rate increases.
I went through this exercise recently, and it was still -just- better than cash. If you needed financing and used a traditional loan, then it's a no brainer. It even beat out the EV specific loans at 5.5% by an impressive margin.. However you do need to shop around. My quote was less than 10% (say around 9.5%), but most companies were charging in the 15% area and a few were charging nearly 20%!! So if your employer has an exclusive contract with a lease provider, you're probably screwed. But if not, there are smaller players who are quite hungry for contracts.
I just took out a novated lease this month for an EV and managed to get an interest rate below 8%
Over 10%? You’re getting ripped.
True but the cost of borrowing in general has gone up. So the opportunity cost of paying cash is the loss of offsetting a mortgage with a higher interest rate. Personal loan rates will have gone up too.
Pays to shop around with some of the smaller leasing companies
And this is before you consider keeping your money on your home rather than paying up front!
Any chance you can share this spread sheet so we can calculate our own?
I'll have to check with Chris to seek his permission. If he's agreeable then perhaps we could convert it to a Google Sheet where users can propagate with their own costs
Appreciate for the explanation mate, just a quick question, since NL will technically reduce your pretax salary, does that reduce the amount of your superannuation contribution by employer as well?
I think the super calculation is based on your initial salary before SS/NL is taken into account but best to check with your employer
So curious what the residual is on a 5yr lease then, is that available somewhere as this spreadsheet looks familiar like the one I saw on FB shared by someone there who built it. I know my residual which I don't have to pay as I will hand the car back and they will sell the car at auction and anything above the residual of about $10k(yes it's an BEV) I get given or I can buy it with the balloon payment and sell privately.
As per ATO: (2023) leasing minimum residual
12m: 65.63%
24m: 56.25%
36m: 46.88%
48m: 37.5%
60m: 28.13%
3 year lease vs 5 year for me was $5000 cheaper on a 3 year lease for an MG4. This is all costs including residual/balloon payment.
Leasing for a shorter amount of time reduces the time you're paying interest on the loan, just like with a mortgage. Repayments do get smaller, but the total cost will be bigger
@@eight10man With a lease it works out to about the same from my calculations if it's 5 or 3 years. Just raw numbers, a 3 year lease is $51,000 and a 5 Year is $56,000. If you add on two years of Rego and Insurance for the 3 year lease (that would normally be bundled into the 5 year lease) then they are almost the same price.
Thanks for breaking this down! Great video, however I'm still confused at which point he saved money on this lease for an EV compared to a ICE vehicle? e.g. if he bought a comparible ICE vehicle for say $50K or less what would be the cost of FBT on this type of car?
Yup great question and possibly the subject of another video
These savings are only when on the highest tax bracket, It is vastly less advantageous when on the lowest tax bracket.
That’s true for salary sacrifice in general
Should’ve be buying a 60k car when you’re on the lowest tax bracket
Could you please send that spreadsheet
I'll have to check with Chris to seek his permission. If he's agreeable then perhaps we could convert it to a Google Sheet where users can propagate with their own costs
Thank you!!@@LudicrousFeed
Any updates on this one?
Check video description - link up
As long as you locked your self into a lease by mid next year and they change the laws around fbt it doesn't change your current lease and fbt
👍
Great job explaining.
Thank you
so with the math i don't see the value it looks like the lease company is the winner
Well yes the leasing company has to make money
In addition to the 47% marginal tax rate, shouldn't the rate also include the medicare levy?
The 47% quoted already includes Medicare. It's actually 45% without the levy
You can add the Medicare levy surcharge on top if you are paying it.
FYI Vic gov no longer subsidies ZLEV. So jealous of owners in QLD 😢
Sadly true 😭
We shouldn’t consider it ironic that the most progressive state in Australia is also comfortably in the most debt therefore unable to afford it.
The biggest issue is, no one wants to buy a used EV. I have seen multiple UK/US owner vids that have used these cars for 3 years and most car dealerships will not trade anything older than the latest generation. When a new generation EV comes out to fix all the issue from the previous model, the trade-in/selling price plummets dramatically. They are essentially a throw away mobile phone. The other issue is if you have an EV car that is having issues, most mechanics are not familiar with this car and will cost you a fortune to repair (unless its under warranty).
I still see mobile phone repair shops around town 😉
But yes in all seriousness, the used car market boils down to simple price/demand economics. If people want the car eg Tesla/BYD, their resale value will be retained as opposed to a less desirable car where their resale may not be as good. Also, some years will also be better than others so it’s always good to do some research when buying used 🙏
UK and US videos about residuals in the used market don't mean squat in our closed market. Used vehicles of any kind in Australia in general hold their value quite well. In the UK in particular used vehicles of any kind and especially luxury vehicles, have always had horrendous depreciation. Used Tesla's have often still got a decent warranty period left on their battery in particular. I'm considering one myself but I'll struggle to find any Tesla for less than 30k even for a higher mileage example.
Would a 1year lease be worth it, so not to be under a longer term finance? And then after 1y one can opt to buy it out, redo the lease or sell and get another one?
You’d have to do the maths I suppose given the bigger balloon payment
I'm curious about this as well, especially in an environment of falling interest rates. I suppose the immediate downside is the weekly payments would be higher to cover the interest portion sooner - still, I'd be interested to see the cost v. benefit analysis on this!
In NSW, is it possible to buy the EV outright to take advantage of the rebate, then sell the car to Novated Leasing Company for Salary Sacrifice? My Novated Leasing Company told me they can buy your second hand car from you for NL, so in theory I think this will work. I wonder if anyone has done it OR if anyone can see any glaring fault in my logic?
I’d assume if this was possible they would probably offer you lower than original purchase price even with the rebate before leasing it back again to you with added interest? I’m just taking an educated guess 🤔
You would lose the benefit of saving on the GST of the initial purchase price of a new car if you did it this way, which is higher than the $3000 rebate.
@johnlambert1744 I've been told by the NL company that they would agree a retail price (incl GST) with me as purchase price from me. Then the lease principle amount would be the purchase price less GST.
@@fushengwang6637That's good then! Great news!
@@fushengwang6637 Yes but you have still lost the benefit of GST. If you buy the car outright - say it's $50K + $5k GST = $55k you need to pay the $55k upfront, there is no GST input tax credit for you unless you are registered for GST (i.e. a sole trader etc.) then it might work, otherwise not.
Does this arrangement reduce super paid by employer?
No it does not impact the super or the accrued leave.
Hi Tom thanks for the comparison. My current ICE vehicle is with Novated lease with a little more over 1 year lease to go. Still deciding if I should transition to EV for my next car. I have seen some video on youtube how some EV car and buses suddenly burst into flame and burnt down the vehicle pretty quickly. How safe are the new generation EV battery?
Statistics show that EV fires are far less common than ICE fires and generally will only occur if there is traumatic injury/damage to the battery eg penetration or water inundation
Tom, research the different types of battery chemistries used by different makers. You might hear of LFP which is almost fire-proof, compared to NMC for example. EV fires are rare but almost impossible to extinguish vs petrol fires which are common but more easily handled.
True that LFP fares better. Difficult to extinguish but I wouldn’t say almost impossible, the recent Model 3 fire on the Hume Hwy NSW was put out in 30mins reportedly (Sep 2023)
The only thing missing here would be the new rates for securing finance
True but the cost of borrowing in general has gone up. So the opportunity cost of paying cash is the loss of offsetting a mortgage with a higher interest rate. Personal loan rates will have gone up too.
I'm was thinking of leasing a tesla through Maxxia but have been informed interest rate is 14.25 %. Now having second thoughts 🤔
Shop around if you can
Maxxia is are expensive. My employer only deals with 3 companies and Maxxia by far was the most expensive.
Doesn't include the cost/ interest rate that a lease company is going to charge.
Yes it does. These numbers are all-inclusive
Second that, it does include interest rates
Hi Tom thank you for that information. Do you think you can clear up if ev's are gst free how do you claim this back if you pay for your car outright. Should it be removed from contract and the car yard collects the refund. ?
EVs aren’t GST free if you buy outright.
In some states they are stamp duty exempt and may also attract an additional rebate depending on the threshold
@@LudicrousFeed thank you 😊
Can you get the government rebate on a second-hand car?
Yes I believe it also applies to used EVs
Thank you.
@@LudicrousFeed Tom, Second-hand EVs are not eligible for Government rebates.
@@kpkaus Depends what you’re referring to … I think the federal FBT EVs discount also applies to use cars built post 1 July 2022
Hey mate just want to say very informative video thank you for explaining i was confused before im not now lol thanks
My pleasure and I’m glad you found it useful
Is it possible to use NSW EV rebate with novated lease?
No. But you get the stamp duty exemption.
Technically no, but there is a loophole - if you can find the cash or short term bridging finance that is not too expensive (say home equity etc) then you can purchase the car in your name, claim the rebate and a month or so later put the car into a novated lease scheme - it's absolutely legal, the only disqualification under the NSW EV rebate is that the car cannot be first purchased under a novated lease scheme, there is no disqualification / payback required if the car goes into a novated lease after the rebate has been paid even if this was the intention all along.
Just did this with RemServ and what a total ponzi scheme! Good luck claiming your home charging. The entry costs to do so totally overwrite the tax gains. Also I love that RemServe sent me a fuel card which is no use to a model 3- who pays the charges for that? Don’t get me started on having to pay $7 a fortnight so that RemServe can pay directly for regular maintenance like servicing …. Um what servicing!? Absolute money grab!!!!
Pays to shop around
Salary packaging can always be customized.
You can find your own car. And the salary packaging company will purchase the car.
Let them know how much maintenance/ insurance you want to pay per year.
This will reduce the monthly payment.
You just have to tell them you don’t want it and send them to the ATO guidelines for claiming charging reimbursement. Most reps seem to know very little about EVs or their own guidelines but it’s possible if you insist and push back. Have successfully fought this twice with two novated leasing companies
I’m considering novated lease a used vehicle (3-5 yrs)… havent run the numbers but I assume a higher gain?
The consensus is yes but fees do vary between leasing companies of course
@@LudicrousFeed thanks mate that’s a quick reply!
Best channel ever.
Thank you that's very kind
@@LudicrousFeed Truth must be told.
My 14k Nissan leaf from 4 years ago has paid itself off in fuel savings , now its just insurance , 80c a day for off peak EV rates, tyres , rego. EV prices are falling day by day, i see little use for a new car, ill never pay it off in petrol savings. For me ill just keep buying second hand leafs.
Used cars represent good value 🙏
@@LudicrousFeed - I still get 120km per charge - perfect for the city. 10% range drop in 4 years , so down to 75% , ill keep rolling as long battery does . 0-100 in 5.7 :) its had some upgrades :) sits on coil overs and fat tyres , a fun little city pocket rocket. Fits the greyhounds in the back - huge boot space :) ill grab a second hand Y or a exc30 dual motor next :)
@@jestronixhanderson9898 if you don't mind sharing, which Leaf do you have? and what does insurance look like?
$130 a month, 2014 leaf
Rego $62
We went 3 years for our Model Y in Vic but got a lower residual due to doing approx 40,000km a year. Our lease provider also accepts the 4.2c per km which is better than our true cost of 3c per km so far over 26,000km.
Nice work!
So the residual amount is locked in from the start? What if by the end of 3 years, and you ended up with much lower km to 40km, will they keep the initial agreed residual amount
@deanphung7018 I'm not sure, but yes residual is written into the lease.
@@deanphung7018this is why it’s important to nominate the kms driven per year as accurate as possible, mainly for your own benefit. This is why some people go on long road trip/holidays with their car (towards the end of the year) to make up the extra KMs they overestimated ! :)
Also need to mention since your taxable income is reduced , so would your superannuation contribution by your employer
Yes correct
Great video, sorry I missed where you mentioned/compared interest rate. Does 8.69% sound reasonable these days?
In todays market, that's a reasonable rate for a lease. Outright finance can be gotten for as low as 5.5% with an EV specific loan.
Are you doing novated lease too Tom?
I’m self employed so no
Interesting to see how much of the tax-payer funded subsidy goes to the novated leasing companies vs the actual incentive for EV buyers, particularly those in the median tax bracket ;)
That’s a question worth unpacking …
State vs federal funds
@@LudicrousFeed That was meant more as a statement than a question, because those forgone tax numbers are already unpacked/implicit in the spreadsheet. Entering the 34.5% median marginal tax rate into the spreadsheet template gives forgone Cwth/Federal revenue of ~$18k (in reduced income tax) and ~$6k of forgone State GST funding (plus Cwth costs of implementing and enforcing the policy): of that the EV buyer gets ~$10k net tax savings and the novated leasing company gets the remaining ~$14k benefit (out of which they would return some amount in taxes). So more of a novated leasing incentive than an EV incentive (given the assumptions in the spreadsheet and if I have summed up the forgone taxes correctly).
Challenge is bordered around the fact that your company offers salary sacrifice.
Yes that must be a proviso of course
Excellent video, good and straightforward explanation of benefits of Novated leaseing.
Question, When you say the True Cost is only $783.36 pm, is that what will be deducted from monthly pay?
Yes I believe so
I struggled to understand this as well - the figure is the difference between the amount that your employer pays towards the lease (pre-tax), versus the amount you would have received in your bank account if you didn't have a lease (post tax). I hope that helps!
How do the numbers stack up when Elon keeps dropping the price of new cars after to start the lease? The ballon payment maybe $10000 more than what the car is worth on the used car market.
Yup fair point. The "agile" pricing may need to be taken into account
As long as you can give it back at end of lease, its OK! But that rarely happens. They allways win!
Can a vehicle be novated leased for three consecutive 1 year periods with 65% balloon each time to achieve a lower balloon amount after 3 years? Applying this approach would achieve balloon of purchase price x .065 x 0.65 x 0.65 or balloon of about 27.5% after 3 years.
Speak to your NL rep 👍
@@LudicrousFeedthanks for this vid, your BYD Seal vid and reply.
I did ask, but had little confidence in vague reply.
Hey thomas, do you still have referrals remaining for this year? I wanted to get a new model y through ur referral. Thanks
Thank you! Please feel free: Use my referral link to purchase a Tesla product and get cash off and other exclusive benefits: www.tesla.com/en_AU/referral/thomas7208
Can we get an updated video for 2025 please
Stay tuned we’ll try to get another real world example for 2025
Good video but its assuming an income of over 200k, not everyone is in that position, how aboutif its more realistic say 120k?
Excellent point. In this spreadsheet you can adjust the marginal tax rate. If I get permission, I’ll aim to convert this to a Google sheet so viewers can plug in their own info
There is a more adjustable Google spreadsheet doing the rounds on Facebook Tesla owners groups created by
Chang Yang Yew
2024 39% Tax/Medicare brackets changes are reflected in the calculations as well (they are dropping so some of the savings pre-tax will drop 2024/2025 FY onwards)
Worth mentioning a trick would be an example say a 2 year lease as a 25 month lease so you can claim the next year's running costs prior to your lease ending, if you plan on keeping the car after the lease ends (Helps eek out a few more savings if you time everything correctly)
Rego + Insurance + tyres + cabin filters
Thank you for this. Can I ask, why 3 years? Why not 5 years?
Sure you can make it 5 years
All looks good except my employer s novated lease interest rate is 12% after tax lease interest rate I got quoted 6% meaning all the savings are swallowed up by the greedy finance company and their cosey relationship with the employer no saving is passed on to the actual employee.
Yes business is business I suppose
Take one year lease and you can get some benefit from the huge dropping in redisdue value
Those tax brackets are wrong
Based on FY 2022
What is the best way to buy a tesla Lease, buy with ballon ? What strategies do you use Ludicrous Feed to buy tesla here Australia ?
If you’re able to salary sacrifice then novated lease seems like a good way to purchase a Tesla in Aus
I know you you made the caveat that these numbers are just for entertainment but I think there are a couple of things missing from the non lease calculation. As this is a company car the running costs are tax deductible, additionally you can also deduct the depreciation of the vehicle - I believe this is around 20% per year. Is it possible to redo that spreadsheet and add in those components.
Can you double dip with depreciation and running costs?
Unless the vehicle depreciation is part of the running costs , it will not be double dipping.
There is no way depreciation claim is allowed by ATO in novated leasing arrangement, simply because the logic is that the car is leased by the employer, not the employee.Always check with your tax accountant.
@@roosiekcj Correct no depreciation for a novated lease. But if you have a company vehicle outside of a Novated lease, you can legitimately claim depreciation in AUS. Upto 20% per year. The exact amount will be determined by your accountant and how much you use the car for business.
Thanks for the video.
We went with a 36 month novated lease on a Model Y RWD.
For my own piece of mind I worked out the different in costs over a 4 year period comparing a Model Y RWD (~$70k vehicle) vs keeping a one year old ICE Diesel SUV (~$55k vehicle).
After 4 years the two vehicles break even due to the much higher running costs of the the ICE Diesel and the lower total costs of a Novated Lease.
I found it a worthwhile exercise to compare what kind of ICE vehicle compares purely on cost with what kind of EV you can get.
I am about to take one , what is your residual value after 3 years ? And any reason for not going for longer , a 5 year lease ?
I just did my own calculations on my BYD and with the novated lease I am driving the car for free over 5 years. its a no brainer.
Amazing👏
Could you please share some figures?
Just remember you don’t own the asset ( car) on a novated lease until the end of the lease term and residual payment made.
So if you are applying for a home loan, a novated lease will certainly go against you and your borrowing power.
How? You've got cash in the bank instead. Better collateral than a car.
no more 3000 Vic rebate!!
Sadly not
"savings"... what's basically happening here is the money is coming out of governments pocket to the lease companies pocket. You still end up paying way more for the car if you did buying cash or in many instances if you have just found a better interest rate...
There’s no doubt paying cash is still the best option if you have the budget for it
What happens if your job ends or you become ill and not afford your payments, buy a quilty used ICE and if will last 20 years
The same applies if you NL an ICE car
Bro is wealthy😊
Smart with his money
You can tell they hate motorbikes 🏍
The gov?
@@LudicrousFeed yeah
TL;DR: Owning a car outright as an asset was better for me personally, than having it hang over my head for the next 4-5yrs 😬
CONTEXT:
I was gonna do this, even emailed Tom peak freakout few months back (cheers for replying mate 🙏🏾). I wanted all the those tax benefits/savings, but wanted to pay it off with the shortest lease... I got denied 😓
I had the cash to straight up buy the car... but I wasn't allowed to lease it for less than 4yrs due to my low income.
4-5years is a big/long commitment to have. So much can change, esp if you change jobs, interest rate rises, wars, who knows. If someone's rent/repayments went up (as they all did) you're pretty screwed from borrowing any money or refinancing.
Novated leases work best for high income earners in higher tax brackets, where your reduced income isn't going to affect your borrowing capacity (which was my concern) and you're saving significantly more on expenses. Sure you save more with longer leases, but if you can afford it, I'd own it sooner.
I feel the same way
Enjoy & be safe :)
The review is June 2025 not Mid 2027
Ok understood
The ATO website says the review will be complete in mid-2027 (The legislation allows the review to take 18 months from the end of 2025, three years after the legislation was passed). www.ato.gov.au/Business/Fringe-benefits-tax/Types-of-fringe-benefits/fbt-on-cars,-other-vehicles,-parking-and-tolls/electric-cars-exemption/
Wrong
Great video! Can you elaborate on RFBT affecting means testing for FTB and family payments? Sort an accountant, but they weren't up to speed with it. I'd love an ev on lease, but not if I lose my benefits for little gain or loss.
Disclaimer: please seek professional financial advice before proceeding … but from what I have read, novated leasing will reduce your taxable income as it is deducted from an employee’s pre-tax salary. This will reduce child support payments as this is calculated based on taxable income.