Budget update | Currently driving 25,000 - 39,999 kms pa? - Case Study

The 2011-2012 Federal Budget alterations to novated leases only affects new novated leases entered into after 7:30pm on 10th May 2011.

If you previously drove between 25,000kms and 39,999kms pa, you would have been taxed at 11% and your next novated lease will eventually be taxed at 20%*. The increase is being phased in over a four year period, and with your next lease you'll experience a reduction in the size of your tax benefit.

Salary packaging a car does however remain the most tax effective way of owning a car.

Here's a worked example of the changes you could expect to see.

Salary and vehicle details

Car

2011 Honda Jazz

Base value of car

$20,763

Salary

$60,000 + super

Term

3 year lease

Annual kilometres  

30,000kms p/a


Given the car and salary details above, the table below displays the difference before and after the budget changes.

Annual payroll effect 
No salary packaging

Leases entered into before 7:30pm 10th May 2011

Leases entered into after
7:30pm 10th May 2011*

Statutory %

NA

11%

20%*

Gross salary

$60,000

$60,000

$60,000

Salary sacrifice

$0

-$10,927

-$9,228

Super

-$4,954

-$4,954

-$4,954

Taxable income

$55,046

$44,119

$45,818

Income tax

-$10,889

-$7,447

-$7,982

Employee contribution

$0

-$2,284

-$4,153

Take home pay

$44,157

$34,388

$33,683

Cost of car

-$14,303

$0

$0

Disposable income

$29,854

$34,388

$33,683


*The change to the statutory rate is being phased in over 4 years and will change from 14% effective 10 May 2011, to 17% effective 1 April 2012, to 20% effective 1 April 2013 and beyond.

The above example illustrates a worst case scenario as it utilises the tax effect of the full 20% statutory rate and does not take into consideration the gradual increase in rate which would actually reduce costs and increase disposable income.

As you can see, after the full 20% change comes into affect in April 2013, the savings for this particular driver segment will reduce by $705.

A novated lease is still however, the most tax efficient way to own a car, and the savings when compared to not salary packaging in this particular instance is $3,829.

Summary

Salary
Vehicle
Savings

$60K

Honda Jazz

$3,829

 


All of the above costs are estimates, and include GST.

Talk to our Team

1800 288 674

Book a free consultation

(with one of our specialists)

Case Studies

In their words..

Testimonials

Autopia staff have excellent vehicle knowledge, and are prepared to provide advi ...

Christopher Wallace,
View Driver Testimonials ...

Blog & Updates

View All ...
To Top