[Schnitzelvonkrum...]

We would like to buy a car, and have heard that salary sacrifice might be a good option for us, but we are totally clueless about the ins and outs of this. My understanding is...

We buy a car
DH has the payments taken out of his pre tax income (as long as there isn't a cost to the business, he should be fine about it)

And then there is something to do with FBT?
And KM requirements?

Can anyone please help me to fill in my big gaps?

[happy2bme]

Have a look at www.smartsalary.com.au. It will explain everything & includes calculators on costs etc.

[Schnitzelvonkrum...]

Thanks so much for your help

[Sassy Dingo]

Firstly, does your employer support salary sacrifice? Lots don't - especially small employers as it is a headache for them, they'd have to do additional FBT returns (if they're not already) and manage the car and servicing and such. My employer does support salary sacrifice, but they run it through an external company which manages it all and you have to pay fees to go through them.

[jayskette]

it's only worth it if after sacrificing you come to a lower tax bracket. You will need to travel something like 25000km/year or more? Most of these arrangements force you to have your car on a lease deal which isn't ideal for some.

[R2B2]

My advice is to seek financial advice before committing to anything.
I agree with having a look at smart salary.

its all about pre tax/post tax.
the FBT from my understanding (but don't qoute me - hence telling you to seek financial advice) is if you don't meet the required KMs in the time frame you choose.

it works for some people, and not for others.

there is also a balloon payment at the end. from my understanding ours is $11k after 5 years of leasing. that part is not worth it in my opinion.

This post has been edited by R2B2: 31/12/2012, 08:38 PM

[Bacongirl]

Talk to your accountant.

It may or may not work for your situation.

We salary sacrifice both our cars with novated leases. DH easily meets his 15,000km minimum, but with a change of job, we have just had to do a 2,000 km road trip to get mine to the minimum.

My car is also starting to cost money . So the petrol and maintenance costs are more than were calculated and we have had to re-pay some money.

We are now looking to sell my car and payout the lease to find something cheaper.


BUT. The savings by bringing down DH's taxable salary is quite good.

[BJBubbles]

We have one car SS through my DH and it's worth it to help bring his pre-tax income down. We also like the convenience of it all.

Check the rules on FBT though - I thought the km requirements had been changed and there was now one flat FBT level - whereas is used to be a gradient - the more km's you did, the less tax...?

ETA, it is slowly changing. HERE is a link explainig the new thresholds, and by 1 April 2014 there will be a flat 20% FBT rate. If you enter into an agreement before April next year (2013) and you intend on driving more than 25000km's a year, you will have a slightly lower tax rate...


This post has been edited by BJBubbles: 31/12/2012, 09:22 PM

[FiveAus]

We have one car SS through my DH and it's worth it to help bring his pre-tax income down. We also like the convenience of it all.

Check the rules on FBT though - I thought the km requirements had been changed and there was now one flat FBT level - whereas is used to be a gradient - the more km's you did, the less tax...?

The new FBT rule regarding kms doesn't take effect until April 2013 (or maybe 2014).

[lsolaBella]

Isn't there something with FBT being grossed up for FTB items, so be aware if that then impacts payments.