Yet another tax advice thread

[dagonite]

So if I have an ABN that I don't really use and plan on getting a mobile phone business plan, what can I claim on tax? Can I really claim anything at all, since I don't use it?

[Ryan1080]

No. Just coz you have an ABN, doesn't mean you can start claiming everything. If you're not running a business, and the purchase you make is not for business purposes, you can't claim the GST or on your tax return.

[dagonite]

Figured. Thanks.

[tehobbit]

Going to jump on this bang wagon. recently started working away.. would like to see my weekly 1000+ tax go towards something other than retarded redhead in canberra... any one got a good accountant for a fifo worker?

[Lump]

sorry another band wagoneer here..

ok, i'm a financial/taxation dumbass, but would appreciate some advice for this hypothetical question.

if you earned 160k gross salary (not inc super) & owned your 2010 model personal car worth $30k out right, would you do a 'sale & leaseback' on it?

its like a novated lease, but for a car you allready own.

good idea or not?

[vy ss ute m6]

^^ Semi Related +1.

Novated Lease - anyone done it recently? Pro's/Con's, things to watch out for?
Or have a calc or spreadsheet for analysis on lease vs loan/purchase?

Cheers

[Ryan1080]

Crikey. I got no time now to answer, but if you do a quick search through my posts, I've covered it a millions times over the years :)

[Lump]

pingpingpingping :P

[Lump]

Crikey. I got no time now to answer, but if you do a quick search through my posts, I've covered it a millions times over the years :)
these are the numbers (including all fees) ive been given by the lease provider - seems to good to be true.

total lease payment a month for $20k over 58months = $838 p/m (before tax)

impact on take home pay = $575 p/m

take out the stuff i would be paying anyway (at the moment after tax has been taken out) of fuel $220, rego $58, comp insurance $43 = $321 p/m

$575 - $321 = $254 p/m for the finance + balloon of $4000 after 58 months

$254 x 58 months = $14732

add the $4000 balloon at the end and the $20k has cost me $18732!

seems like a amazingly good deal to me - or what am i doing wrong?
__________________

[Ryan1080]

That's for a fully maintained lease yeah? If so, that sounds about right I think. Generally speaking when you add up the total lease costs (excl running costs) net of tax, plus the baloon payment, the sum of that tends to be a little bit lower than the cash price you would have paid for the car.

In other words, when you think about it carefully:
- the car is financed at an interest rate of say 10% or less
- the car depreciates at say 20% per annum (for ease of maths)
- yet you save 31.5% (or 38.5%, or 46.5% depending on your income) in your income tax
- and you save 10% GST on the purchase price, less 10% GST you have to pay on the baloon

That leaves you with a net cost of less than the cash price usually. Unless you get raped by FBT... but at a 20K car that is highly unlikely.

[Lump]

they wanted $360 a year for maint but i took that out cause the car only needs 1 oil change a year, so that will cost me about $60 since i do them myself.
rego & fully comp insurance is included as well as a $30 a month management fee.
the rate is 8.5%
the car is worth 28k, but im only going to sell & lease it back for 20k

seems like a great deal to me, but i will go thru the fine print tomorrow (early exit fees etc)
we plan to keep this car quite a while, so im struggling to find any negatives with doing this.

do you think i should go the full whack and take 28k?
thanks a lot for the reply

[Ryan1080]

I'd take the full 28K. You'll maximise your deductions that way.

Have you given much thought to FBT though? Is your work gonna be deducting FBT off you? Or are you doing ECM split on the instalments with some of it being post tax etc? Also keep in mind anything you spend post tax towards running the car, that is in excess of what's needed to reduce FBT to zero, you can claim back through your work via further salary sacrifice.

[Lump]

tbh i dont understand fbt at all..
this is whats on the quotation-

employer fbt type - full fbt payable
fbt method- statutory
statutory percentage rate with *ECM- 20%
fbt base value- $20k
**gross taxable value- $4k

* not sure what this means
** not sure what this means either

thanks!

[Ryan1080]

20K is the base value of the car. Given your quoted kilometres, 20% of your car's base value is taxable, hence the 4K is the taxable amount.

So you're doing ECM. If you'll look at your quote, you will notice a mix of pre-tax and post-tax deductions from your pay. When you add up the 12 months worth of post-tax deductions, those will equal to 4K. Basically, in the FBT formula, the taxable amount is directly reduced dollar for dollar by any post tax deductions, or payments you have made towards the car. So in your case, the 4K they take out of your pay annualy post-tax, reduces FBT to zero.

In other words, you can either pay the 46.5% FBT tax rate, or miss out on a portion of your income tax claim on the lease at your tax rate. Usually, unless you're in the top top tax bracket, you'd rather miss out on a portion of the income tax caim as the tax rate is lower than the FBT rate, if that makes sense, hence why you've been recommended to do the ECM. If you're in the 30% bracket, no point saving 30% on the 4K on your personal tax, if you're then paying 46.5% on that via FBT (it's levied on the employer, but 99% of them deduct it further form their pay so it's neutral to them)...

[Lump]

ok, i think i understand that.

i dont have any other 'investments' or tax minimizing schemes going, so with that in mind doing this sounds like a good idea & possibly going for the full 28k is good too?
(from what you've read here?)

[Ryan1080]

Yep. It's only when it gets up to a lot higher figure where the FBT becomes a pain in the ass, where you ant to have that figure lower. 28K is alright though. Get a new quote for that and compare perhaps?

[Lump]

i ended up taking 24k - ends up to be interest free.
thanks a lot for the advice Ryan1080

[Torquen]

Fuck tax is boring!

[Ryan1080]

No probs :)


Fuck tax is boring!

It's like with garbos, someone's gotta do it :\