Novated Leases and Traps

You've no doubt heard of the tax benefits a novated lease can bring, but are you aware of the major traps and the mistakes people are making when taking one out?

[@hidden2753]

Clear and simple explanation.. Thank you

[@mcaaccountantsAU]

Glad you liked it

[@HODL_BTC]

Thanks 🙏

[@mcaaccountantsAU]

You’re welcome 😊

[@meteora8888]

The effective interest rate would be the NV rate discounted by your marginal tax rate wouldn't it? So if it's 12% interest and you're tax rate is 40%, the effective rate is 7.2% p.a?

[@Haven_Events]

If you have already taken out the novated lease can you consolidate it for a cheaper interest than salary sacrifice the new payment?

[@mcaaccountantsAU]

You can refinance, but it will depend on the arrangement you have with the current provider (is the lease/loan able to be paid out/refinanced?)

[@brnatlas9611]

So if you have bugger all work use and can get a lease rate 9 or less you aren’t doing too bad

[@deanphung7018]

So, what if i only use the car for personal purpose, does it make sense then?

[@mcaaccountantsAU]

You would need to run all the numbers, it depends on the type of car, the interest rates and fees charged by the novated leasing company, your income, and so on

[@meteora8888]

So with ev being fbt exempt, is it then a no brainer as all payments are pre-tax?

[@mcaaccountantsAU]

For an EV, yes, it's a no-brainer IF you trust the Government not to change the rules during your period of ownership