Q: What is a Novated Lease?
A: A novated lease is a three-way car finance agreement between you, your employer and Alliance Leasing. It enables to you to bundle all your car running costs into one regular ongoing tax effective payment. By doing this you can reduce your taxable income, pay less tax and receive significantly more money in your pocket.
Q: How does novated leasing work?
A: Traditionally, you earn a salary, pay income tax and then pay for all the costs of your car with the remaining money, also known as post-tax income. A novated lease allows you to pay for all the costs of your car with both pre and post-tax income.
Q: Are there any fees associated with novated leasing?
A: Alliance Leasing offers a zero fee service. We do not charge any fees such as;
- Setup fees
- Documentation fees
- Administration fees
- Management fees
- Exit fees
- Procurement fees
Q:What can be included in my novated lease?
A: With a novated lease you can include the following costs;
- Servicing and maintenance
- Registration and CTP
- Comprehensive insurance
- Roadside assistance
- Car washing and detailing
Q: What isn’t included?
A: There are a few items in which you cannot include in your novated lease
- Parking costs
- Fines and speeding tickets
Q:Does the vehicle need to be used for work purposes?
A: No, the vehicle can be used for 100% private use with no requirement to keep a logbook.
Q: What is a residual?
A: A residual, or balloon payment as its sometimes called, is an amount that is outstanding at the conclusion of the lease term. It is a percentage set by the ATO to reflect the value of the vehicle at that time. It is designed to be a neutral cost.
There are several options available to you at the end of the lease:
- Sell or trade-in your car and lease a new one. Any surplus funds achieved from the sale are yours, tax free
- Refinance the residual amount and continue leasing the same car
- Pay out the residual and own the car outright
Q: Do my kilometres matter?
A: We don’t strictly monitor the kilometres you drive, but we do use your predicted kilometres to budget your running costs. If there is a change to your usage, we will liaise with you to ensure your budgets are not compromised.
Q: What happens if I spend less or more than has been budgeted?
A: We understand that vehicle usage can fluctuate month to month and that it isn’t always possible to predict the vehicle usage for the life of the lease. Alliance Leasing proactively monitors your budgets and if there is a matter requiring your attention we will contact you.
Q: Can I choose my own car?
A: Yes, and we can even help! Alliance Leasing can source heavily discounted vehicle pricing on all makes and models through our nationwide dealer network. This convenient service is free of charge. However, if you would prefer to source your own vehicle that is absolutely fine!
Q:Are there restrictions on the type of vehicle I can put on a novated lease?
A: On a novated lease, the vehicle must be classified as a ‘car’ by the ATO. Motor cycles, boats, trucks and some utilities are excluded.
Q:Can I only lease new cars?
A: No, you can also lease used cars through a dealer or private sale. Typically, cars up to 12 years of age at the conclusion of the lease term are acceptable. Please remember if you do elect to purchase through a private sale, the GST savings on the purchase price are no applicable.
Q: Can I lease the car I currently own or have under another form of finance?
A: Yes, you can! Alliance Leasing can refinance an existing finance arrangement into a novated lease. You can even lease a vehicle you currently own through our sale and lease back option.
Q: Can I trade in my current car?
A: In accordance with the ATO, trade ins or lump sums cannot be used to reduce the purchase price of the vehicle. The tax benefits are intended for the use of the car rather than the acquisition of an asset. So you can trade in your current vehicle for cash separate from the lease, this way you avoid tying up cash in a depreciating asset and have an opportunity to use those funds in something more profitable!
Q: What if I change employers?
A: Providing the new employer accommodates Novated Leasing as a staff benefit, we can assist with the transfer of your lease to the new employer. If the new employer does not offer novated leasing, then the lease would simply revert to a finance only arrangement whereby you pay the finance payments yourself using post tax income, much like a standard car loan.
Q:What is FBT (Fringe Benefits Tax)?
A: FBT is a charge incurred by your employer associated with the provision of benefits which are additional to standard salary. Novated leases are considered such a benefit. To alleviate any FBT liability to the employer, Alliance Leasing uses the employee contribution method (ECM).
means that a portion of your lease costs are collected for your salary after PAYG income tax is applied. This post tax contribution offsets any potential FBT cost to your employer and makes the whole concept possible
Q: How do I save on GST?
A: With vehicles purchased through a dealer, 10% of this purchase amount is GST. This amount is excluded from your finance and not paid by you.
Depending on the policy of your employers, you can also save 10% on all running costs as your employer pays and claims this on your behalf.
Q: Do I own the car?
A: The finance is in your name. The vehicle is registered to you. The responsibly for operating and maintaining the vehicle is yours, this includes insurance. Alliance Leasing is there to help every step of the way.
Q: Is the car registered to me?
A: Yes, the car is registered to you in your name. As such all relevant renewal notifications will be sent directly to you by the relevant authorities.
Q: Who insures the vehicle?
A: Alliance Leasing can arrange comprehensive insurance and facilitate budgeting for self-sourced insurance premiums. Please be aware that ultimately it is your responsibility to ensure the car is insured at all times.
Q: Can I choose my own Comprehensive Insurance?
A: Yes, absolutely. Alliance Leasing can arrange a policy for you in house as a matter of convenience. However, you are certainly free to choose your own provider and we will package those costs in your novated lease.
Q: How do I renew my registration and self-sourced insurance?
A: Because the vehicle is registered in your name, the renewals will be sent directly to you. If you have sourced your own comprehensive insurance, any renewals will also be sent directly to you. To ensure they are paid on time, please forward all renewals to Alliance Leasing 14 days prior to their due date.
Q: Can I lease multiple cars?
A: Yes, subject to approval it is possible to lease multiple vehicles on the same salary. So you can salary package a car for your partner or family members as well as yourself.
Q: How do I pay for fuel?
A: Alliance Leasing can provide Caltex, Shell and BP fuel cards. If you need to fill up an alternative provider, we can reimburse those costs for you within two days via our online portal.
Q: How do I get my car serviced or replace my tyres?
A: Alliance Leasing has partnerships with a number of reputable providers across the country where you can access fleet discounts on servicing, tyres and labour. Please refer to your Glove Box Guide for further information. If you would prefer to choose a supplier of your choice that is perfectly fine. Please advise the service centre that the car is under lease with Alliance Leasing and to call 1300 225 582 for authorisation and payment.
Q: What happens with left over funds at the end of the lease?
A: At the conclusion of the lease, any surplus funds are returned to you via your employer’s payroll.