Novated leasing is a specialist vehicle finance option that allows employees to salary package their car and running costs. This includes car payments, fuel or electricity, servicing, tyres and registration.
Novated leases typically attract Fringe Benefits Tax (FBT), but with the Employee Contribution Method (ECM), it is possible to avoid FBT altogether. This is an essential consideration for many employees. For more information about the novated leasing tax calculator, click here.
Pay less tax
If you are an employee, a novated lease with salary sacrifice is one way to get a new car without paying tax. This specialist form of car finance involves an employer agreeing to deduct a vehicle’s lease payments from an employee’s pre-tax salary, which can significantly reduce an individual’s taxable income for the year.
As well as the lease payments, many novated leases include the cost of the first year’s registration and comprehensive car insurance. Depending on your circumstances and the type of car you choose, this could help you save thousands.
Another benefit of a fully maintained novated lease is the residual value, which remains owing at the end of the lease term. This is generally less than the car’s trade-in or private sale price, meaning any upside on the residual is yours – tax-free. For more information, visit Jade Finance’s novated lease calculator or talk to your accountant.
Save money on running costs
With a novated lease, all your running costs are included in the package, including roadside assistance, insurance, servicing and fuel. This is usually cheaper than paying for these items from after-tax income. For more information about the novated leasing tax calculator, click here.
Novated leasing also offers flexibility in choosing the best car for your needs. This includes access to wholesale pricing, flexible payment terms and the ability to add a residual value at the end of the lease so you can sell the car privately and keep any upside.
If you want to know more about novated leasing or if you have any questions about what your estimated savings might be, please give us a call and speak with one of our experts. Our team will happily help you make the most of your car packaging. We can even help you find a car that suits your lifestyle and work requirements while ensuring it is as cost-effective as possible.
Make the most of your vehicle
Novated leasing is a popular salary packaging option that allows you to pay your car and its running costs from pre-tax income. With a fully maintained novated lease, you spend all of the car’s operating costs – including lease rentals, fuel or electricity, registration, servicing and insurance – from your pre-tax salary.
This saves you GST, and deducting your novated lease payments from your pre-tax salary can reduce your taxable income. Fringe Benefits Tax (FBT) is still applicable but is applied at a flat rate rather than in tiers based on the number of kilometres driven. For more information about the novated leasing tax calculator, click here.
With a FleetPartners Novated Lease, you can choose the right car for your needs and budget. We then bundle your car finance and budgeted running costs into a single monthly payment on payday, so you don’t have to worry about those peaks and troughs in vehicle expenses. This includes a budgeted amount for fuel, helping you avoid those unplanned trips to the service station.
Plan ahead
Novated leases are specialist car finance arrangements that allow you to salary sacrifice both the leasing and running costs of a vehicle with your pre-tax income. Generally speaking, this makes the overall cost of your car cheaper than if you pay for it out of your after-tax income.
While Fringe Benefits Tax (FBT) does apply, it’s typically far less than what you would expect to pay if you were paying for a new car from your after-tax salary. FBT is reduced because the lease payments are taken from pre-tax salary and aren’t reported on your tax return.
This is the primary way a novated lease can help you save money, and it’s why there’s been such an increase in Aussies taking up this option to buy their next vehicle. Of course, your situation and financial circumstances will determine if it’s right for you, so we suggest seeking professional taxation advice before you commit to a novated lease.