These days, so many Australian businesses offer their workers the flexibility to include a motor vehicle as part of their salary package. Vehicle salary packaging allows employees to drive home a new or second-hand car as well as offering a hassle free way of maintaining and servicing that car during the lease term.
Commonly known as a novated lease, it is actually a three way contract 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 allows the employer to deduct the lease payments from the employee's pre-tax income leading to considerable GST and PAYG tax savings.
If you are considering getting a new or second-hand car, here are a few of the reasons as to why the salary packaging option will suit you best:
o The lease is tax and cost effective. The lease repayments are deducted from your earnings before tax leading to substantial tax savings every pay cycle
o You get to select the vehicle that you require. As the package is not thought as part of a firm's fleet, you get to choose the type of car that you want. You don't have stringent restrictions and options as you are free to get the car of your choice.
o When you decide to salary package your vehicle, you are free to use it any time you would like. Also, there are no limitations on the people who you allow to drive it. It is yours 100% and you can let anyone you like drive your car.
o If you switch your employment, you can bring your lease and vehicle with you. It is completely transferrable and portable. All you have to do is to enter one more Novation Agreement with the new company you are connected with.
o You are free to pick from the flexible lease terms between 1 and 5 years. This permits you have more time to pay for the car you have leased.
o Through a salary packaging agreement, your vehicle's finance and operational costs are considered a "related benefit." Due to this, all car related expenses (such as fuel, maintenance, insurance, registration, etc) are efficiently exempt from GST and income tax.
o Latest modifications to FBT legislation even imply that novated leasing is an appealing option for those staff that travel very few kilometres every year. Hence, whether you travel 5,000km or 35,000km every year, novated leasing supplies substantial tax savings.
With the above reasons, it is no surprise why there are several people who are presently entering into a novated lease agreement. It truly does offer several individuals with the exclusive prospect to buy and own a brand new car.
Author Resource:-
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. They can help employees structure their salary packaging effectively - resulting in a pay rise for employees at no extra cost to employers PLUS a reduction in their ecological footprint. For more info please visit http://www.simplygreen.com.au
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