Working out leasing costs

[Merry Vanly Stan]

leasing only makes sense if you value oppurtunity cost

ie. say you owned a car worth 40k, sold it to a leasing company and then leased the same 40k car based on 7% repayments. you then have 40k that you can invest, so say you can get an 8% return by putting your money into property or the sharemarket then you're ahead. furthermore, if you use your car 50% for work then you can claim 50% of your lease repayments on tax.. so you get money back! if you owned the car outright it's a lot harder to claim costs on tax.

[Falc&Send]

While on the subject of leasing, say if you owned a business that needed a small fleet of utes or trucks for deliveries would you be better off leasing them or buying them outright (obviously a large capital outlay to buy outright)? Assume rough capital cost of each vehicle is ~$50K. What about other equipment such as forklifts or even computers? Buy or lease?

[phat-turbo]

While on the subject of leasing, say if you owned a business that needed a small fleet of utes or trucks for deliveries would you be better off leasing them or buying them outright (obviously a large capital outlay to buy outright)? Assume rough capital cost of each vehicle is ~$50K. What about other equipment such as forklifts or even computers? Buy or lease?

if you want to invest in the development of said business, why would you want to spend a vast amount of capital on depreciating assets?

the other answer to your question really depends on whether you want to own the goods or are happy renting... all plant & equipment that is income generating should always be financed regardless of being in a position to pay cash, the cash can be utilised elsewhere within the business. You'd be hard pressed finding a large turn over / profitable business not utilising asset finance products despite being in a position to pay cash for all cap-ex requirements

[phat-turbo]

it's not hard to claim costs on tax if you own a car outright. perhaps not as beneficial, but its easy to do.

contrary to popular belief, you do not need a log book at all either (i believe you would if you are claiming lease repayments). i use the 12% method on my $35k car for a $4200 deduction each year. i only need to "reasonably show" how i do a minimum of 5000 business kms a year, which i can do easily.

http://www.ato.gov.au/individuals/co....htm&page=3&H3

From that you'd probably still be better off leasing...

Say your $35k vehicle did less than 25000km a year therefore depreciating at 20%...

First year taxable claim = Depreciation of $7000 + $4200 kilometre adjustment (5000km no log book)
Second year taxable claim = Depreciation of $5600 + $4200 kilometre adjustment (5000km no log book)
Third year taxable claim = Depreciation of $4420 + $4200 kilometre adjustment (5000km no log book)
Total tax deduction of three year period = $29620

Pretax fully maintained novated lease based on kilometres between 15001-24999 on same vehicle would be approx $14k/pa thus over three year period giving you deduction of $42,000 ... saving of $12.5k which would just about cover the residual for you to purchase the vehicle at the end (Based on 36months with 40% residual ($14k).

[wiggah]

it's not hard to claim costs on tax if you own a car outright. perhaps not as beneficial, but its easy to do.

contrary to popular belief, you do not need a log book at all either (i believe you would if you are claiming lease repayments). i use the 12% method on my $35k car for a $4200 deduction each year. i only need to "reasonably show" how i do a minimum of 5000 business kms a year, which i can do easily.

http://www.ato.gov.au/individuals/co....htm&page=3&H3

[Gats]

anyone got a dummys guide to leasing?

i only ask, because currently I have a company vehicle (4wd hilux dual cab), that i can use pretty much for everything driving related i do (eg, after hours and weekend personal use), but i'd like to get something nicer/faster for weekend trips away with the missus, and for holiday's. I dunno if its financially viable for me to do it, or whether i should just HTFU and keep using the work ute :ugh2: