I use my car for work and looking to buy a new car, around $40k. I have $10,000 in savings and would like to ask if I should use the money for a deposit or look to get a loan as part of a salary sacrifice. Is this a good idea and are there any tax implication or benefits, thank you?
I think that your question is "should I go with a Novated Lease or buy my own car"??
and the answer to this is "it depends"
you WILL save on tax with a novated lease.......BUT your payments under a novated lease include a deemed amount to compensate your employer for the Fringe Benefits Tax that your employer is going to deal with because it is now providing you a car at its expense.
FBT actually is extremely effective at transferring the tax burden from the individual driving the car to the employer....and there is very little you can do to dodge this cost, because the novated lease company will tell you how much TAX you are saving, but remain deadly silent on any Employee Contribution.....which you are paying.
What I would do is compare the costs of doing it all yourself out of your take-home wage, and see how much income you have left to live on, then compare this with how much you have to live on under a Novated Lease.
my bet is that you wont be much worse or better off under either scenario.
UNLESS you want to buy a second hand car, which for the most part are not available under a novated lease........the big saving for you here is the loss in value that a brand new car has in its first month has been absorbed by someone else. Hence you initial cost to purchase a car is a LOT lower.......
but thats my personal preference: I have never bought a new car and doubt I ever will. They are a sinkhole for money and are nothing other than a means of getting from point A to point B. I buy a second hand car and drive it until it is dead.
But if you like the smell of a new car, then you wont be any worse off with a Novated Lease......but you wont be any better off either:)
I love Brendan’s answer to this. Whilst I do vehicle finance and car loans, I have to agree that buying a new car is generally a bad idea for an individual. You have taken time to save $10,000 and then you would give it away in one day.
There are very few differences between the two, if you leave your employer you take the car and the responsibility with you with a Novated lease so I would think that taking out a loan in your own name and claiming actual expenses in your own tax return would be the best way from the start. You can do a tax variation to improve your weekly take home pay or wait until year end and get a lump sum refund.
Best of luck