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2 weeks ago
Novated Lease – $20,000 cash for Jenny's Car
Yes, you can get cash for the car you are now driving and then lease it back under a novated lease arrangement and SAVE on cash flow, GST and income tax.
This approach is called a Sale & Leaseback and is one of the greatest secrets of how to free up cash!
Example: Jenny loves her Mazda 3 Maxx Sport and $20,000 in Cash
Last year Jenny purchased a Mazda 3 Maxx Sport hatchback in soul red. She saved up for several years to buy the new Mazda and paid $26,990 cash.
Jenny is looking to renovate her kitchen and has received a quote for $20,000 to do the makeover that she has always wanted. Jenny spoke with her bank and they will lend her $15,000 for the kitchen at 14.5% and the balance Jenny will put on her credit card at a rate of 21%.
Before moving forward with the bank finance Jenny was speaking with her friend Pauline that works in the HR department about her plans for the kitchen renovations.
Pauline knew that Jenny paid cash for her new Mazda and so she suggested Jenny look at a Sale and Leaseback on her Mazda to getting the funds to pay for the kitchen renovation.
Jenny spoke with the team at One Car Group and they explained the process and the cash flow and tax savings of a novated lease.
Through One Car Group Jenny applied for a novated lease. The finance was approved on a Tuesday and Jenny received $20,000 cash for her Mazda 3 Maxx Sport on the Friday!
Not only did Jenny get a $20,000 cash injection into her bank account she also saves over $2,000 per year in tax by salary packaging her car.
Requirements for Sale & Leaseback
• Minimum $10,000 market value
• Maximum 10 years at end of lease (e.g. 7-year-old car can be leased for 3 years)
• Car has been serviced, maintained, road worthy and has no major damage
• Independent inspection of the car arranged by the financier
The application for finance is the same as if you were purchasing a new or used car. ...
5 months ago
STOP throwing your money away on Car Ownership
Owning a car with no ability to claim a tax deduction is in essence owing a liability 🙁
Australians have a passion for cars. We have a high number of them on the road and a preference for travelling via car as oppose to other forms of transport (e.g buses and trains).
Our passion for car ownership is where we fall down. Cars are rapidly depreciating assets and unless we rent them out to generate an income they can only be looked at as a liability.
As an example, a Mazda 3 Neo Hatch with a drive away price of $23,490, driven 300 kilometres a week, financed over 3 years has the following costs per YEAR:
-$8,900 for financing on a secured car loan
-$1,450 in fuel
-$850 for registration & CTP
-$1,100 for comprehensive insurance
-$930 for servicing, repairs, tyres and roadside assistance
PLUS add the cost of your road tolls
So around $13,000 of annual costs per YEAR for three years plus your road tolls (hopefully no parking fines or other infringements).
At the end of three years if you decide to trade in the Mazda 3 then you could expect to get back around $13K for a trade-in or if you keep the car then you are up for higher running costs in the form of brake replacements, higher servicing costs and other things that may go wrong.
Leasing – the Americans Love it
Avoiding the pitfalls of car ownership in America is achieved via leasing a car. Leasing has been “a thing” in the land of the free since the 1950’s but very few in Australia understand that we have our own version in Australia.
Leasing a car in the US of A is big business. Around 4.3 MILLION cars (28.7% of new car sales) were leased by Americans in 2016 up from just over 1 million in 2009. One of the key drivers of leasing is that customers don’t want to be left with an outdated car after 3 years, just like they enjoy upgrading their iPhones and Samsung phones. Also with a lease the finance company is the owner. The younger car drivers of America would rather put the depreciation of the car on the finance company rather than carry the cost and risk.
The Aussie version of leasing – Novated Leases!
We have to be similar but different to our friends in North America 🙂
Back in the 1990’s the Novated Lease was born. It is a way of getting a tax deduction on the finance and running costs (e.g. fuel) for your car. Terms can be 1 to 5 years with the most popular term being 3 years.
The tax deductions (GST and income tax) and lower finance repayments achieved via structuring mean the cost of “owning” a car are vastly reduced.
Example – using the same Mazda 3 Neo Hatch
The cost of running a Mazda 3 Neo Hatch (same as the one in the example we provided earlier) would be $8,500 with a novated lease compared to $13,000 using a secured car loan. You save around $4,500 per year.
At the End of A Novated Lease
Using the same example of the Mazda 3 the trade-in value is around $13,000 and the amount owing to the finance company is around $11,000, so when you trade in the car and upgrade you can earn a $2,000 tax free profit.
Overall you save $4,500 per year for 3 years and bank a $2,000 profit on trade-in.
Net result is you have $15,500 more CASH in your bank account using a Novated Lease 🙂
OK to be fair if you use a secured car loan, you own that rapidly depreciating Mazda 3 which you can try and sell on Carsales.com.au along with 200,000 cars that are listed for sale. Have you ever experienced the frustration of trying to sell your used car?
So STOP throwing money away on car ownership and look to get into a car which saves you a ton of CASH. ...
6 months ago
Budget ONE and Fuel Cards
All businesses should adopt an approach to the management of their fleet of motor vehicles beyond the controls that are provided by their accounting system. Accounting systems such as Xero, MYOB, Quickbooks and the larger enterprise accounting systems do not have sufficient controls for the management of motor vehicles. Invariably this leads to a lack of control and understand of the costs of each vehicle in their fleet.
Outsourcing the fleet management of motor vehicles is a well worn path with the larger organisations in Australia. A quick search online you will find a significant number of outsourced fleet management providers that take care of:
- Roadside assistance
The fleet manager also provides monthly reporting of the expenditure on each vehicle to the customer understands what the cost to run their motor vehicles is over the life of each vehicle.
The FIVE top reasons why Budget One with our fuel card(s) is a way to manage from one to 100 motor vehicles:
1. Fuel card(s)
With a choice of one or two fuel cards your fleet drivers will have coverage in all locations that they use your vehicles. Fuel cards eliminate the need to use credit cards and reconcile the credit card statements each month. Saving you tonnes of administration and ensuring that the costs on the fuel cards are only for the nominated vehicle. You can also elect to have roadside assistance added to your fuel card for cars, utes and truck.
2. E-Tags and Tolls
There is no need for a deposit for the e-tag and tolls are charged to One Car Group and then allocated to your business vehicles each month. Our process also avoids you having to process toll company invoices as they are rolled up into the One Car Group invoice with all other costs of your fleet vehicles.
3. Fleet pricing
Through our partner Caltex, your business will enjoy the benefits of pre-approved servicing, repairs and tyre replacements at fleet discounted parts and labour rates. The process of pre-approval ensures that your fleet vehicles are not “over serviced”, claims under warranty are correctly captured and you enjoy the fleet discounts.
4. Removal of Administration
The Budget One product removes a huge amount of monthly administration including processing:
- Reconciling credit card costs for fleet vehicles
- Toll invoices
- Roadside assistance invoices
- Registration renewals
- CTP greenslip renewals
- Servicing, repairs and tyre replacements
The time freed up by removing the administration can be used on more productive tasks.
5. Budgeting – we do the heavy lifting for you
Our Budget One service is budgeted on a weekly, fortnightly or monthly basis. As such we invoice you the budgeted amount as agreed for each vehicle on one invoice and as we incur the costs for running each vehicle they are expensed against the budgets. Each month we provide a report of the costs incurred for each vehicle so that you can understand what the life to date costs of all running expenses for each vehicle. ...