Why luxury cars cost too much in Australia

[cheap]

People need to put things into perspective, for example, buy a $2,000,000 boat. You'll pay zero Luxury Tax on the boat. Oh wait...

[paulb351]

Originally Posted by SensationFG8

You forgot you dont pay GST on any of the vehicle purchase and running costs if they are leased. That's a 10% saving on fuel, servicing, tyres everything. The 20% flat rate still saves some people 25% if they're in the top marginal rate.

As far as I can see leasing is still a viable option for people with the correct financial conditions. It's just not as attractive as it once was when you could get it down to 11 and 7%.

I would say the real killer is the amount of low interest finance that's going around the car industry at the moment. I think novated lease companies still run quite high interest rates on the loan component.

I haven't forgotten the GST part of the equation, just pointing out that what ever the benefit (GST off price or running costs, pre tax/post tax) the FBT tax on the deal is now so significant it removes the ability to gain a benefit.

Yes you are correct in that the novated lease firms provide the financing part of the package at non-competitive rates, along with other various fees and charges that transfers what ever benefit is left from the purchaser of the vehicle to the novated lease provider. This is usually because employers stipulate on novated lease provider and so they know they do not have to compete on price and work on emphasis on particular parts (GST savings for example) rather than the holistic outcomes (and comparisons with other ways to finance, e.g. personal loan and payments out of post tax income and no FBT...