Benefits of a Novated Lease
Benefits of a Novated Lease
Benefits of a Novated Lease
A novated lease has become increasingly more accepted form of vehicle financing over last few years in Australia. A novated lease has several features of more customary forms of vehicle finance to convey some remarkable profits for both employers and employees.
A novated lease is a three way agreement among employee, financier and the employer, where the commitment to meet the repayments in the finance leases is with the employer. In addition the employer may pay all the operation expenditures associated with the running of the car. The sum of all these costs is subtracted from the employee's remuneration, consequently reducing the tax.
Repayments with a novated lease are flexible and amounts depend on the time, interest rate, amount rented and the enduring payment.
In this deal, the employer pays the monthly lease payments on behalf of the employee, and supplies the vehicle to the employee to apply as an element of their salary packaging arrangement. If employment ends on any grounds, or the lease agreement is completed, the Novation compulsions assumed by the employer revert back to the employee.
Benefits of a novated lease to
Employee
Employee may select the make and model of the car
It is not forever a company car; you may use it for 100% personal use
Alternative to have the vehicle at the end of the term
Employer
If registered for GST (goods and services tax), may claim an input tax credit on every payment
Once the employer is terminated, the employer is not responsible for disposing of the vehicle
Capability to offer prospective employees, a smart salary package
One can opt the vehicle (make, model and year) to be leased, including:
latest vehicles
Second hand vehicles (from a dealer, public sale or privately)
Your recent vehicle, financed at the present wholesale value
Custom-made vehicles with the types of accompaniments one wants.
There are no restrictions on the purchase value, provided you can meet the financial obligations of the lease and related running costs.
There are detailed rules for Residual Values on Finance Lease set through legislation. It is advised that you select the lowest acceptable residual value to reduce the prospect that the value of your vehicle at the end of the novated lease is less than the residual amount.
A Novated Lease suits any employee who wants to incorporate a motor vehicle as part of their salary package.
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