[Avisaurea]

I have faced a problem of what to choose. There are 2 options offered. 1. Motor vehicle allowance 18000 pa 2. Motor vehicle valued at 18000 pa.
They said that most people prefer to have a company car rather than allowance. What would you choose and why?

[willsken]

OK, let me get this right. You can have $18,000 per year or a new car every year for the value of $18,000. Very nice! :D

I'd go for the money. They are of the same value and do you really need a new car every year? I love cars but I don't feel the need to change mine more than every couple of years. Then think of the holiday you could have on the money you get in a non-car buying year! :yes :D

[Avisaurea]

"You may elect to receive a fully maintained company motor vehicle or a fully inclusive motor vehicle allowance.

Fully inclusive Motor Vehicle allowance includes fuel and all other associated costs for you to provide your own motor vehicle in the performance of your responsibilities. If you elect the motor vehicle allowance, the company will pay 9% company contribution to the approved Superannuation fund on this allowance. Please note that the motor vehicle allowance is tax deducted at your current income tax rate. It is important you understand than onus for substantiation of expenses (for taxation purposes) claimed against this allowance rests with yourself. "

As I understood from the above, I will be taxed from 18000.

I suppose that fully maintained company motor vehicle means Motor Vehicle + (fuel + insurance+other related costs valued at 18000). I don't think they will provide me with a new vehicle every year.

[willsken]

Ah, that sounds more like it. In that situation I think I would probably go for the car rather than give the tax man a chunk!

[Paul]

Ah, that sounds more like it. In that situation I think I would probably go for the car rather than give the tax man a chunk!

I think you would still pay tax on the benefit value of the car though, as you do here in the UK?

Or, actually does the employer pick up the tab for this in the Fringe Benefit Tax?

The fact that they will also contribute 9% of the additional pay into pension could be a bonus though to go for the money

Nice decision to have!

[jo-and-jeff]

Given the high price of petrol, $18000 may not be enough to coverfuel and all other associated costs for you to provide your own motor vehicle in the performance of your responsibilitiessuch as insurance, licensing, Warrants of Fitness, maintenance, and repairs.

Bear in mind that if you buy your own new car, it will lose nearly half its value the moment you drive it off the dealer's lot. If you buy a used car, chances are that you'll be shelling out more for maintenance and repairs (especially since it needs to qualify for a WOF -- every 6 months, I think).

In my view, a company car is almost always the better deal. But you should crunch the numbers to make sure of that for yourself.

Jo

[Trigirl]

if your car is less than six years old it only needs a WOF every year. after 6 years it then needs one every 6 months. if you get one thats only a few years old then servicing etc shouldn't cost you the earth but it won't lose new car depreciation as jo mentioned (although i think nearly half might be a bit on the high side!!!)