Who Can Get a Novated Lease?
The simple answer is anyone! As long as you are earning an income and paying tax can get a Novated Lease. However, there are a number of considerations and processes that need to be in place before an employee can take advantage of the tax savings generated by a Novated Lease. These process of establishing the service is straightforward for any employee and in a majority of cases has already been established without the employer even knowing.
ESTABLISH THE EMPLOYER SERVICE
A Novated Lease is a tri-party agreement between the employee, the employer and the leasing company. Therefore the employer has a few simple requirements to have in place to be able to offer the benefit to all employees without any administrative burden. The main step is to choose a Salary Packaging provider who will manage the payments and reporting. It is the Salary Packaging company that completes 99% of the work, and in all cases, Vehicle Solutions Australia offers this service to employers for FREE. The only additional requirement on the employer is to establish a payroll code for the pre-tax payments being deducted from the employee’s salary, establish the payments and transfer the money to the Salary Packaging provider. The Salary Provider then manages all payments and reporting.
NOW ANY EMPLOYEE CAN BENEFIT – NO MATTER WHAT INCOME THEY ARE ON
If an employee is earning an income and if paying tax then legal ATO based tax minimisation services such as a Novated Lease will be beneficial. The main myth about Novated Leasing is that the employee needs to be on a high income to benefit. This is not the case. Novated Leasing is a comparative benefit. If an employee is on $150,000 a year and saves $15,000 in tax over the lease term, this is a major benefit. However, to an employee on $35,000, a tax saving of $6,000 over the lease term could be life-changing. Different employees have different perceptions of what is a significant tax saving. It is important to get all of this information based on your own personal requirements upfront and in writing. Vehicle Solutions Australia has an online Novated Lease Calculator that will give you an instant result without having to enter your personal details. The calculator will give you an accurate cost to your take-home pay and the tax saving you will generate.
Vehicle Solutions Australia also saves employees money on the cost of their car and insurance. These upfront savings assist in reducing the lease cost, and this reduces the payments coming out of every pay.
If you have any questions or would like to know how much you could benefit from a Novated Lease, simply call Vehicle Solutions on 1300 990 880 or visit our website at www.vehiclesolutions.com.au.