A great incentive for your employees
If you’re thinking about vehicle financing, a novated lease can be a great option – for you and your employee. So it’s worth understanding exactly what kind of agreement it is, as well as the benefits.
What’s a novated lease?
It’s a three-way agreement between you, your employer and a finance company, and a popular way for businesses to engage in vehicle financing on behalf on an employee.
How does it work?
Your employee commits to a pre-tax salary deduction to cover the costs of leasing the vehicle – things like insurance, registration, servicing and finance. It’s a very common form of salary packaging or salary sacrificing.
What are the benefits for you?
- Your business is offering a value-added
incentive to your employees
- The management and administration of the
- vehicle’s maintenance is your employee’s responsibility
- You may be able to claim input tax credit for
any GST incurred on associated running expenses
- Vehicles provided under a novated lease aren’t
classed as an asset or a liability to the business.
What are the benefits for your employees?
Here’s how your employees can benefit from a novated lease:
- They’re able to choose a vehicle that suits
- They can drive the vehicle for personal use
- Possible income tax savings – depending on
- personal circumstances
- They may be able to own the vehicle at the end
of the term
- They can potentially transfer the agreement to
- another employer
- Easier budgeting of running costs
- Possible volume discounts if the employer leases
- many vehicles.
What about Fringe Benefits Tax?
Vehicles that are salary packaged under a novated lease are considered a fringe benefit for tax purposes. To find out more about Fringe Benefit Tax (FBT), your best option is to seek out professional advice.
Want to know more?
The good news is that talking to Aussie won’t cost you a cent. So if you’re thinking about novated leases, or you’d like more information, contact us on 1800 097 234 or enquire online today.