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Chapter 1: What is the main topic discussed in this episode?
Welcome to Fear and Greed. I'm Sean Aylmer. Today, something a little different on the Fear and Greed feed. We're sharing an episode from our sister podcast, How Do They Afford That? hosted by Michael Thompson and Kenna Campbell, which comes out every Wednesday.
There's been a huge surge in interest around electric vehicles and novated leases driven by both tax benefits and the soaring cost of petrol. But do the numbers actually stack up? And who really benefits? Michael and Kenna break down how novated leases work, the tax advantages, the hidden catches, and whether going electric could actually save you money.
Welcome to How Do They Afford That, the podcast that peeks into the financial lives of everyday Australians. I'm Michael Thompson. I'm an author and the co-host for the business news podcast, Fear and Greed.
As always, I'm with Canna Campbell, financial planner and founder of Sugar Mama TV, the financial literacy platform covering YouTube, podcasts, Instagram, threads, TikTok, and books like our upcoming book, 12 Months to Financial Freedom.
Chapter 2: What is driving the surge in electric vehicle ownership?
Not long to go now, coming out in September. Are you excited about it, Canna?
I am. And if you haven't ordered a copy yet, you get onto it straight away because this is going to really transform your financial future.
I like that.
I'm really proud of what we've done, and it's so easy to follow along. Everything's broken down into bite-sized baby steps, and it's just clean and clear. You'll know exactly what to do, but you understand why you're doing it and the benefit.
And no matter where you're at as well in your life, career, money, there is something in there for you.
And you take it at your own pace. Yes.
Yes. Anyway, there is a link to pre-order in the show notes, but you can also just find 12 Months to Financial Freedom wherever you order books online. Go into your bookshop and tell them to order it in for you. Coming out in September. Anyway, today's episode, Canna, is very much, I would say, driven... by the... That's a pun, but you won't understand the pun until you hear what the topic is.
Unless you've read the title of the podcast.
Oh, that too. Yeah, good point. Good point. It is driven by the cost of living, right? And the cost of filling up a car with petrol or diesel, which really, really hurt earlier this year when almost overnight... And what was kind of maybe $100? I'm thinking about my car, diesel, right?
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Chapter 3: How does a novated lease work for electric vehicles?
So particularly people who are looking to refinance as well, not necessarily taking on new debt, but refinancing. you want to check this with your mortgage broker before you go and do this.
What are the other risks here? Is there potentially you're not going to get the mileage out of it and therefore you're actually paying more than the value of what you're getting?
Yes, of course. But then there are actually bigger ones, more serious ones. So, you know, with the fringe benefit tax, I know, well, this is why I'm so glad we're doing this episode because normally I would err away from this topic being a depreciating asset that provides, you know, very little benefit other than a lifestyle one. But, you know, you're playing with your adjustable taxable income.
So your employer, because you're now packaging a car, can only pay super, the 12% super guarantee, on your reduced salary. So say I'm earning $50,000 a year and I go and package a $10,000 a year car and So $10,000, I'm now being taxed at $40,000 a year. My employer only needs to pay 12% on the $40,000, not on the $50,000.
So I'm actually now jeopardising what's going into my superannuation and therefore there is a consequence or a repercussion to my final superannuation account balance. Did you know that?
I did not. Well, to be fair, I also haven't tried to take out one now that's a good reason.
And same issue could increase your HECS debts as well. Not increase your HECS debts, sorry, increase your HECS repayments, the minimum repayments. And also if you qualify for any sort of subsidies like childcare, it can also impact that as well.
Okay. All right. The end of the lease, we talked before about the balloon payment. And so you need to be prepared for that as well, right?
Yeah.
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