Unique Original Articles » Why A Novated Lease Is Best For You?

Nowadays, several Australian companies provide their staff the flexibility to include a motor vehicle as part of their salary package. Vehicle salary packaging allows employees to drive home a brand new or used car and also providing a trouble free way of taking care of and servicing that car throughout the lease term.

Commonly referred to as a novated lease, it is actually a three way agreement between the employee, employer and the salary packaging company. In this case, the car is leased in the employee’s name and then novated (transferred) to the employer. This process enables the employer to deduct the lease payments from the employee’s earnings before tax leading to significant GST and PAYG tax savings.

If you are looking into getting a brand new or second-hand car, here are a few of the reasons why the salary packaging choice will fit you best:

• The lease is tax and cost-efficient. The lease repayments are deducted from your pre-tax income resulting in substantial tax savings every pay cycle

• You get to decide on the vehicle that you want. Since the package is not thought as part of a firm's fleet, you will be in a position to pick out the kind of car that you want. You do not have strict limitations and options as you are free to get the car of your choice.

• When you choose to salary package your vehicle, you are free to benefit from it any time you want. Also, there are no limitations on the people who you permit to drive it. It is yours 100% and you could let anybody you like drive your car.

• If you switch your employment, you will be able to bring your lease and vehicle with you. It is completely transferrable and portable. All you should do is to get into another Novation Agreement with the new firm you are connected with.

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

• With a salary packaging agreement, your vehicle’s finance and operating costs are deemed a “related benefit.” Due to this, all car related costs (like fuel, maintenance, insurance, registration, etc) are effectively exempt from GST and income tax.

• Latest modifications to FBT legislation also suggest that novated leasing is an appealing choice for those staff who travel very few kilometres every year. Hence, regardless of whether you travel 5,000km or 35,000km every year, novated leasing supplies 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 offer so many individuals with the exclusive opportunity to purchase and own a new car.
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