How can I calculate my savings with a novated lease?
By using our online Novated Lease Calculator you can calculate your savings in as little as 30 seconds. However it is also important to understand where the savings are being generated. The following article outlines the way a novated lease works and how our Novated Lease Calculator generates the figures.
For most employees without a Novated Lease that pay for a vehicle in after tax dollars the calculations on tax are very simple;
Total Taxable Income (1) x applicable tax rate including the medicare levy = Tax Payable (2). (1) – (2) = “Take Home Pay”
Example – $75,000 (1) x 23.22% = $17,422 (2). (1) – (2) = $57,578.00 Take home pay.
HOWEVER THE CAR AND RUNNING COSTS NEED TO BE PAID. IF WE USE THE SAME RUNNING COSTS IN THE BELOW EXAMPLE
$57,578.00 – $11,266 (Running Costs of car) = $46,312.00
With a novated lease the calculation has two extra components. A before tax salary sacrifice amount and an after tax contribution towards the FBT to reduce the FBT to $0.00. (Read more on FBT)
Taxable Income – before tax deduction = Total Taxable income (1) x applicable tax rate including the medicare levy = Tax Payable (2) minus after tax contribution (3). (1) – (2) – (3) = “Take Home Pay”
$75,000 – $4615 = $70,385 (1) x 22.63% = $15,829 (2). After Tax Contribution $6,660 (3). (1) – (2) – (3) = $47,896.00 Take home pay.
HOWEVER THE CAR AND RUNNING COSTS ARE COMPLETELY PAID FOR.
Therefore by Salary Packaging the car on a novated lease this person will save $1,584 every year in income tax. Added to this the employer will also pass on an additional $386 in GST savings automatically in the payroll calculation.
This brings the total saving per year of $1,970 or $9,850 over the 5 year finance term.
If you haven’t found your new car yet but know what you want try our online new car buying site www.motorbuys.com.au. Motorbuys is designed so that you can choose the exact car in a few simple clicks. Motorbuys is the only site that allows you to choose the exact colour and accessories so that dealers can provide an accurate quote, so you can make a more informed decision.
To obtain a pre-approval on your lease click HERE