Menu
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.
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.
This includes;
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:
Let’s not forget about the convenience side of things!
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!
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.
