Saturday, July 26, 2008

"Vehicle Salary Packaging - How Can it Save You Money?" - Summary

Putting it All Together
We've talked about the three ways of saving money when you salary package a vehicle via a Novated Lease. You can save money on:
- the purchase price;
- on GST; and
- on the salary packaging.
Now lets put it all together with a realistic example.
Say Mr. A. Person wants to buy a Ford Focus TDCI (Hatch) with a recommended retail price (On Road and with accessories) of $31,800.00.
The Novation company, with their access to fleet discounts etc. is able to purchase the car for $28,100.00.
Saving 1: $3,700.00
The Tax Invoice price for the vehicle of $28,100.00 includes GST of $2450.00. This GST is claimed by the finance company as an Input Tax Credit. (So is not included in finance contract.)
Saving 2: $2450.00
By Salary Packaging the vehicle under the Employee Contribution Method your net take home savings are approximately $4135.00 per year.
Saving 3: $4135.00 x three years = $12,405.00
Total Savings: $18,555.00
When you analyze a Novated Lease agreement the savings are quite considerable. Why would you go out and buy a car yourself - paying the total price and putting a great deal of your savings into the purchase - if you are able to novate one? The more I learn about this, the more I'm convinced its the way to go.

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