What is Novated Leasing?
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.
How does novated leasing work?
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.
- Servicing and maintenance
- Registration and CTP
- Comprehensive insurance
- Roadside assistance
- Car washing and detailing
As you are using pre-tax income to pay for the majority of these costs you are effectivity reducing your taxable income, paying less tax and receiving more money in hand on pay day.
The process of novated leasing can sometimes seem complicated, however at Alliance Leasing we will walk you through the process from start to finish and have you driving your dream car sooner.
A novated lease is all about savings and convenience, lets run through some of the great savings available to you:
- No deposit is required to secure your dream car
- Save 10% of the purchase price as you do not pay GST
- Save a further 10% on your running costs as the GST is paid by your employer
- Generous fleet discounts on all makes and models
- Fleet discounts on fuel, servicing, tyres and labour
Let’s not forget about the convenience side of things!
- Your car can be used for 100% private use
- Your choice of fuel cards with Shell, BP and Caltex
- All servicing and maintenance costs are billed directly to Alliance Leasing
- Peace of mind that all your vehicle costs are packaged into one simple payment
- No logbooks required
- No requirement to travel a set amount of kilometres
What is FBT and how does it affect my lease?
FBT (Fringe Benefits Tax) 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 your employer, Alliance Leasing will structure your lease using the employee contribution method (ECM).
ECM also known as a post-tax deduction means that a portion of your lease costs are collected from your salary after PAYG income tax is applied. This post tax deduction offsets any potential FBT cost to your employer and makes the whole concept possible.
The post-tax deduction is not an additional charge or cost. It is simply a portion of your overall lease payment that is collected post tax, the remainder is collected pre-tax!
What happens at the end of the lease?
There are several options available to you at the end of the lease, Alliance Leasing will contact you six and three months prior to the end of your lease to discuss which options works best for you.
- 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
Alliance Leasing can assist with the disposal of your current vehicle. Through our dealer network we can source competitive trade in valuations and save you the hassle of privately listing your car. Alternatively, in partnership with Pickles Auctions you can request a valuation through their online valuation system.