Novated Leasing isn’t just for employees of big business or Government as most people think. Any employee can benefit with a Novated Lease and there are huge savings to be gained from taking advantage of the tax benefits that this product offers.
Things You Thought You Knew About Novated Leases
Regardless if you’re an employee or an employer, you might have a few questions about novated car leases and whether they are good option for everyone involved. The truth is, novated leases have something to offer both employees and employers, with many of the supposed downsides simply being common misconceptions. Here are the most frequent areas of confusion we’ve heard for novated leases.
1. “You have to earn above a certain amount for a novated lease to make sense”
Well, a benefit of a novated lease is that employees get a break on their taxes by paying their lease with their pre-tax & post-tax salary. This can make an impact no matter what your income is – everyone saves to some degree or another. Some employees may be able to move from higher tax brackets, but this doesn’t make novated leases disadvantageous if you are not in a high tax bracket.
2. “You have to drive a certain number of kilometres per year to benefit”
There is such thing as the Fringe Benefit Tax, reducing the employees tax savings, but even employees who choose not to drive regularly can get a tax break with a novated lease. In the past it would have been affected by how many kilometres you were travelling, but not so anymore.
3. “There’s just so much paperwork.”
If you’re working with an experienced lender, this should not be a problem. A great bonus for the employer is that the lender takes care of all the administrative headaches, so if you have reservations from having novated as a salary packaging option previously due to mountains of forms, or time staff spent incorporating it all, then you probably weren’t working with a novated lease provider who was experienced with novated leases. Nor one that has a simple “plug n play” system such as we do.
4. “This company doesn’t employ me to, or expect me to drive.”
Novated leasing isn’t just for company provided cars. We are letting employees know they can gain huge savings via salary packaging their personal / family car. The car sitting out in the car park or home in the garage.
5. “You can only buy a new car.”
Incorrect, Novated car leases can be used to purchase a brand new car, a second hand – used car or you can turn around and place your owned outright car under lease. Same goes for any car you have now that is under finance.
6. “We don’t need novated leases, we have a company fleet.”
Well, this is actually a pretty good option you are providing your staff. If your company has a fleet already, transitioning to a novated lease can carry significant benefits, since the employee is buying the car – not the employer. So it’s coming out of their pay, not the company bottom line. Then, they take the car when they leave, so you aren’t stuck with ageing vehicles with a declining value. Not to mention that you can lease almost any type of vehicle (except any vehicle that weighs in over a ton) under a novated lease agreement.
Novated leases are a great deal for employees and employers alike, so talk to us about how you can make it work for you.
Novated Car Leasing Options does not purport to offer legal, financial or taxation advice. Employers and employees should seek independent advice as to the implications of a Novated Lease transaction. The salary packaging amounts and take-home pay calculations set out are estimates only. While due care is exercised by us to ensure the integrity of the estimates it does not make any warranties, express or implied as to its accuracy or completeness. Powered by Paywise. Trademarks and Brands are the property of their respective owners.