Key Highlights
- Enjoy Tax Benefits: Reduce your taxable income by incorporating lease payments and running costs, including tyres, into your pre-tax salary.
- Save on GST: With a novated lease, GST savings can be substantial, offering up to £6,334 off the purchase price for cars under £69,674.
- Flexible Car Options: Choose a new, used, or electric vehicle—or even transfer your existing car into a novated lease.
- Employer Involvement: Payments are directly handled by your employer, simplifying financial arrangements.
- Fixed Payments: Novated leasing offers predictable monthly costs, promoting clarity and ease of budgeting.
- Electric Vehicle Incentives: Benefit from fringe benefits tax exemption on eligible electric cars within a certain price range.
Introduction
Have you ever wanted to find a way to save more when you need to get a new car? A novated lease could help you do that. This is a type of finance arrangement that uses salary packaging. With a novated lease, your employer will pay your lease payments from your pre-tax salary, often simplifying the process with a single deduction each payday. This can lower your taxable income. It can also help cover other car costs, like fuel and servicing.
Novated leasing gives you extra fringe benefits and offers more choices. These options can work with your needs and goals. Because of the fringe benefits tax advantages, this setup can be a good fit for many people.
Keep reading if you want to learn more about how novated lease providers could help you. See how this kind of leasing and packaging can work for you.
Benefits of Choosing a Novated Lease
Choosing a novated lease provider gives you financial benefits you won’t find anywhere else. With a novated lease, your vehicle repayments and running costs are added together in one convenient regular payment. This payment gets taken from your pay before tax. So, it can bring down your taxable income right away. By using salary packaging and saving on fringe benefits tax, you get the most from your money. Having everything in one payment also makes it simple to handle your budget, so you can be on top of your money with less hassle.
A novated lease is also flexible. You can pick a new car, a good used car, or even an electric car if you want to be greener. The choice is in your hands. If you prefer, you can also turn your car into a novated lease, potentially saving on both tax and GST. Additionally, if you change jobs, you can transfer your novated lease to a new employer, giving you even more options. Novated leasing gives you choices that fit what you need. It’s made to work for you and keep things easy.
Save on GST and Enjoy Tax Benefits
A novated lease lets you enjoy GST savings that can really change the way you buy a car, especially in QLD. If the car you pick costs less than £69,674, you do not have to pay GST. This helps you save money right away. If the price is higher, there is still a GST saving of up to £6,334. You get more savings at the start than with some other ways of financing.
When you add lease payments to your pre-tax salary, a novated lease can lower your taxable income. This means you pay less income tax. People who use salary packaging often do this because the savings are simple and clear. You can also include car costs like petrol or servicing in these plans. This makes the whole package even better for your money.
If you care about the environment and think about getting an electric vehicle or a plug-in hybrid under the £91,387 luxury car tax limit, there is even more to like about the electric car discount. The government gives fringe benefits tax exemptions to eligible EVs. So, with novated leasing, you save money, help the planet, and can make the most out of the fringe benefits that come with your lease.
Flexibility in Choosing Your Car
Unlike the usual way to get a car, a novated lease gives you the freedom to pick the car you want at a great price. You can go for a brand-new one straight from the showroom or choose a used car if you want a lower price. The novated leasing process matches your needs but does not take away the main benefits.
For people who care about the environment, electric vehicles are a great choice. Novated leasing can help make an EV more affordable by offering tax savings. This means you can get an eco-friendly car and save money at the same time. Electric vehicles also have lower running costs, and you might get fringe benefits tax exemptions, so they are a good, modern solution.
If you already own your car and do not want a new one, you can still benefit from a novated lease. You can transfer your current car to a novated lease to get GST deductions and other tax benefits. Novated leasing providers have options made for all kinds of budgets and situations.
How Does a Novated Lease Work?
The process with novated leasing is easy. You pick a car and choose a lease term, usually from one year to five years. Then, your employer pays for the lease straight from your pre-tax salary. All of the lease and running costs come together in one simple, regular payment.
Novated leasing is great for tax savings and helps with easier budgeting. You get one fixed payment, so you always know what to pay. Salary packaging cuts back your taxable income too. These are the main reasons why a novated lease is so popular with people in different jobs and industries.
The Role of the Employer in Novated Leases
Your employer helps make novated leasing easy for you. They take your lease payments and other costs from your pre-tax pay. This task is done so you do not have to worry about making payments yourself. This is called salary sacrifice. It saves you time and the way it is set up can also help you save on tax.
There is a fringe benefits tax that comes with novated lease agreements. However, the way everything is organised, the impact of this tax is made smaller. The government offers plans such as the FBT exemption that help lower this tax. If you lease an electric car that costs less than a set amount, you might not have to pay fringe benefits tax. This could give you more ways to save money.
Your employer also takes care of all the rules and paperwork during novated leasing, so you do not have to. Working with your employer makes novated leasing different from normal car loans. With them, novated leases can be easier and might come with more benefits than you would get from the usual way of buying a car with a lender.
Understanding Salary Sacrifice Arrangements
What makes novated leasing so different is the way it uses salary sacrifice. Your lease payments are taken out of your pay before tax is applied. This lowers your taxable income. The part called salary packaging does not just cut the tax you have to pay. It also gives you more money to take home.
Fringe benefits that come with novated leases make this plan even better. In addition to the lease payments for the car, the availability of benefits allows you to include other costs like maintenance, insurance, and registration in your salary packaging. These extras help save you money and make your payments easier to handle.
With novated leasing, you also get more freedom. You can mix your payments with the benefits your job offers. This setup is a simple and smart way to get an affordable car and make use of the tax-saving fringe benefits from salary packaging.
Conclusion
To sum up, getting to know more about novated lease providers can really make a difference in how you own a car. It also gives you some great financial benefits. When you use a novated lease, you save money on GST and get tax breaks. This lets you drive the car you want with a flexible payment plan that fits well with your salary, while also keeping in mind the cost of your novated lease. It’s important to know that your employer will help set this up with you. Choosing a novated lease could be a good step that matches both your budget and your way of living. If you want to learn more, please get in touch for a free chat. We can talk about how a novated lease and its GST savings might help you.
Frequently Asked Questions
What is a Novated Lease?
A novated lease is a finance arrangement that lets you pay for your car through your job. Your lease payments are taken straight from your pay before tax. When the lease ends, at the end of your lease, you can choose to pay the residual value to keep the car. You can also sell it and keep any profit. This is what makes a novated lease different from other ways to own a car.
How Can I Benefit Financially from a Novated Lease?
Novated leasing lets you save on tax because your lease payments and running costs come out of your pay before tax is taken out. Some novated lease companies offer fringe benefits tax-saving ideas, like electric vehicle deals, that can help you get more tax savings. These fringe benefits also lower your total purchase price.
