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Novated Leasing: It’s Worth It!

The short answer is Absolutely !!!

Then they ask, what is it?

A novated lease is an agreement between your employer, a finance company and yourself.

When you choose the car you want, you then enter into a finance agreement in your own name. Then you, your employer and the finance company all sign a novation agreement. A key item here is that some lease companies will allow an employee to “finance” their existing vehicle or a pre-owned vehicle. You choose the car you want.

Your employer will make the monthly lease payments to the finance company, and you can use the vehicle as part of a salary packaging arrangement. With that agreement, most of the lease, running costs of the vehicle and fringe benefits tax (FBT) are deducted from your pre-tax salary. Your income tax is then calculated on your reduced salary, which will usually increase your net disposable income.

Benefits to you, the Driver.

Tax free running costs.

Unlimited personal use.

Up front budgeted motoring

Fully managed car ownership

Fuel Card

Income maximisation.

Your company makes your monthly payment for you

Benefits to Employer.

Payroll Tax savings on every dollar spent.

Employee is in a safe late model insured roadworthy car.

Employee has no bills to pay

One touch payroll activation

Helps build Employee Morale.

No cost implementation

Fully Managed Novated Leasing is the last employee personal use tax saving options currently offered from the ATO.

Effectively this means that a purchaser doesn’t actually buy a car, it’s financed and done so by packaging a salary in a way that payments to cover the costs of the lease come out of the salary before the taxation office get their slice. And by effectively lowering the amount of salary received, the tax bracket the salary slots into can be lower and/or have a lower rate of tax applied, which can mean the after tax pay is better.

There are some immediate benefits to the driver

The car can be for private use only, or a combination of work and play. A payment structure for the lease can be worked out so running costs such as fuel, insurance, new tyres, are all a 100% pre-tax payment.

GST is saved too, as having a novated lease means motoring costs are GST free for employees.

A company such as Fincar can assist in helping you with an obligation free quote for you and your company. Call 1300 346227

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