Novated Lease- A Perfect Option

These days, so many Australian businesses offer their staff the flexibility to include a motor vehicle as part of their salary package

. Vehicle salary packaging permits workers to drive home a brand new or used car as well as offering a trouble free way of taking care of and servicing that car throughout the lease term.

Generally called as a novated lease, it is actually a three way agreement between the employee, employer and finance provider. In this situation, the car is leased in the employees name and then novated (transferred) to the employer. This process enables the employer to deduct the lease payments from the employees earnings before tax leading to significant GST and PAYG tax savings.

If you are thinking about getting a new or used car, here are some of the reasons why the salary packaging alternative will fit you best:

The lease is tax and cost-efficient. The lease repayments are deducted from your pre-tax income leading to significant tax savings every pay cycle

You can choose the vehicle that you want. As the package is not considered as part of a companys fleet, you will be able to choose the type of car that you want. You dont have strict limitations and alternatives as you are free to get the car of your choice.

When you opt to salary package your vehicle, you are free to benefit from it any time you would like. Also, there are no limitations on the people whom you permit to drive it. It is yours 100% and you can let anybody you like drive your car.

If you switch your employment, you can bring your lease and vehicle with you. It is entirely transferrable and portable. All you must do is to enter one more Novation Agreement with the new organization you are connected with.

You are free to choose from the flexible lease terms between 1 and 5 years. This lets you have more time to pay for the vehicle you have leased.

With a salary packaging agreement, your vehicles finance and operating costs are deemed a related benefit. Because of this, all car related expenditures (such as fuel, maintenance, insurance, registration, etc) are efficiently exempt from GST and income tax.

Modern changes to FBT legislation also mean that novated leasing is an appealing choice for those staff that travel very few kilometres every year. Thus, regardless of whether you travel 5,000km or 35,000km per annum, novated leasing provides substantial tax savings.

With the above reasons, it is no wonder why there are several people who are now entering into a novated lease agreement. It truly does provide so many people with the unique possibility to purchase and own a new car.

Simply Green Salary Packaging provides an effective salary packaging solution for organisations that want to find ways of adding value to their employees'

remuneration and reducing the impact on the environment.

by: A. Morrow

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