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More than just home loans

Novated Leases

3 Cars  (600 x 233)

A novated lease is a finance facility often utilised in salary packaging. Essentially it’s tripartite (3 way) agreement between the employee, the leasing company and the employer.

A novated lease can be either a bare facility covering just the finance rentals, or it may also include the operating costs of the vehicle including registration, servicing and fuel etc.

Benefits to the Employee

In addition to allowing the employee to take advantage of the tax concessions associated vehicle finance and operating costs in their salary packaging.

Most novated leases are automatically calculated with the Employee Contribution Method (ECM). This means payment will be a mix of pre and post tax salary deductions to eliminate additional Fringe Benefits Tax (FBT) bills.

The employee is able to drive a vehicle that suits their taste and lifestyle at a cost that they are able to select rather than just having a nominated company vehicle.

There are no restrictions on the use of the vehicle, and at the end of the term, if the employee wishes they may pay out the residual and retain the vehicle, sell it and hopefully make a profit, or trade it in on a new vehicle

Benefits to the Employer  

Novated leases allow the employer to offer a more attractive salary package to potential employees, without having to worry about providing a company vehicle.

If the employee leaves the firm for any reason, they become liable for the rentals, operating costs and residual value.

The firm is not stuck with a second hand vehicle that is surplus to requirements or not suitable to offer to an incoming employee.

Related Topic:           Fully Maintained Operating Leases for Vehicles