Novated leasing benefits business and employee
Businesses are always looking for ways to attract and retain valuable staff. Novated leasing is an easy, no cost way for employers to offer a more valuable remuneration package without increasing wage costs.
There are many misconceptions around novated leasing. It’s not necessarily just for higher income earners. For many, having one payment to cover all their vehicle expenses in a more tax effective way can ease the burden of rising costs of living. The introduction of a flat rate to calculate FBT has made leasing simpler and means people no longer have to be doing high kilometres to maximise the tax benefit.
What is novated leasing?
A novated lease is a form of salary packaging. It is a three way arrangement between an employee, employer and financier. The employer is debited a payment each month for the lease payment inclusive of all running costs. A payroll advice is sent to the employer showing the deductions required from the employee’s pay cycle breaking down the pre and post tax contributions to eliminate FBT.
The employee is ultimately responsible for the car.
When the term of the lease has expired, the employee is responsible to pay the pre-determined residual value.
Employees have the option to re-finance the lease for a further term, pay the lease out to own the vehicle, or trade or privately sell the vehicle and roll over into a new lease.
The benefits of novated leasing through an expert financial services firm extend to employees and employers and can save people thousands of dollars across the life of the lease.
• Helps to attract and retain staff
• Reduces payroll tax and work cover premiums
• Reduces FBT burden through active management and reporting
• Reduces administration
• No residual risk or excess vehicles if an employee leaves
• Ability to offer employees a car of choice; new, used or the car they currently own (sale and leaseback)
• Income tax savings
• GST savings on the purchase price and the running costs of the car, including fuel (subject to the employer’s GST status and salary packaging policy).
• Discounts on new cars through an optional car buying service
• The convenience of a fuel card
• Help in setting a budget for car expenses including the finance, fuel, maintenance, registration and insurance
• Complete car management with one regular payment
• An online account to keep track of car expenses and usage.
You can see from the above list that novated leasing is well worth considering. Having said that, it is not for everyone and expert financial advice is recommended.
There are a range of other finance products which can be considered particularly those who are self-employed or businesses with a fleet of pool vehicles.
For further information contact JSA Group on (02) 4908 0999, email firstname.lastname@example.org or visit www.jsagroup.com.au