| A finance lease established by an individual and the finance company, with their employer agreeing to take over all rights and responsibilities of the lease for the duration of the lease or until the individual leaves that employer. All finance costs and other costs to maintain the vehicle (insurance, fuel, maintenance, tyres etc) are paid by the employer using pre-tax dollars and reducing the employee's taxable income.
Whilst a Fringe Benefits Tax is payable, subject to each individual's circumstances, it is common for the employee to improve their take home pay simply taking the finance as a Novated Lease using pre-tax dollars.
Employer Benefits of a Novated Lease
- Reduced Motor vehicle administration - when purchasing vehicles and establishing finance, ongoing day to day management and also disposing of vehicles
- Comprehensive reporting, including FBT Reporting
- Potential significant tax benefits (payroll, Medicare). (individual company benefits should be confirmed by your accountant)
- No unwanted "pool cars" when employees leave resulting in excess vehicles
- No loss on resale of vehicles
- Able to become the employer of choice by offering employees flexibility and potential income maximization.
Employee Benefits of a Novated Lease
- Choice of motor vehicle (new or used)
- Savings on purchase price through Motorfleet
- Potential tax savings to increase take home pay from Salary Packaging
- Able to structure finance to suit you
- Potential to gain equity in your vehicle
- Employer may pass on GST input tax credits to the employee, which will reduce the monthly lease repayments
- Able to take your vehicle and the Novated Lease with you to another employer so you can keep your car even if you change employer
- Access to fuel discounts
- Full service and maintenance management, with qualified mechanics authorizing all vehicle work at trade pricing minimizes costs
- Easy budgeting of vehicle expenses as one deduction of salary before you get paid covers all vehicle expenses (except fines and infringements which are still yours to pay).
- Unlimited private use
- Able to package another family members vehicle
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