How To Calculate Deduction For Novated Lease

Q&A Tax

Question :

Lucas enters a novated lease with his employer commencing 1 April 2018. Lucas purchased a luxury car
at a cost of $85,000. The lease payments amount to $18,000 per year, with the interest component on
the lease payments being $5,800.The running costs (including depreciation) of the car amount to
$12,000. The car will be used 60 per cent for business use.

Calculate the deduction which would be available to the employer for the 2018–19 financial year will be?

 

Answer :

Fringe Benefit Tax of the car will be:
Statutory Formula Method
20% x $85,000 = $17,000
FBT = $17,000 x 2.0802 x 47% = $16,621
Operating Cost Method
($18,000 + $12,000) x 40% = $12,000
FBT = $12,000 x 2.0802 x 47% = $11,732
Total deduction available (using statutory method):
Deduction = FBT + Running costs + Interest = $16,621 + $ 12,000 + $5,800 = $34,421
Total deduction available (using operating cost method):
Deduction = FBT + Running costs + Interest = $11,732 + $ 12,000 + $5,800 = $29,532

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