Sunday, Apr 30, 2006 at 18:58
On our Salary scarifice deal we get to pay most of our vehicular expenses out of Pretax Salary. Here's how it works.
I take out a Novated lease for a new Prado with Toyota Financial
Services for 5 years. My employer then pays the monthly Lease payments, Maintenance fund, Insurance and Rego from my pretax salary. They also provide me with a
Shell card and a
Caltex card. Any fuel I buy for the Prado goes on those cards and is also charged back to my employer who pays the bill from my pretax salary.
Because I, as an employee, am a business expense to my employer, my employer can claim a GST Input Tax Credit on all these expenses therefore they claim that and I don't pay any GST. This is the benefit to the employer. Makes the Salary budget stretch a little bit further.
Because the ABC is claiming those vehicle expenses as a business cost (instead of paying me in cash salary) ALL use of the vehicle is considered business use and is therefore tax deductible. There is a fringe benefits tax contribution that I have to make up but this is not very much. Basically I spend about $16,000 a years leasing and running the Prado. Due to Salary Sacrificing about $11,000 of this is tax deductible so I effectly save paying 30 cents in each dollar than if I had just taken the money as cash and then gone and paid for my own car. I save about $6,000 a year when all savings are taken into account.
It can be a bit complex to understand but if your employer is willing to provide it then it can save big bucks.
Cheers
Muddy
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