There is no such thing as a stupid question when it comes to Novated Leasing.
If you have additional questions or would like more clarity and assistance please click on the button below, complete the form and a member of our team will be back to you asap.
The simple answer is no, however this works in the following manner. The leasing company pays the dealership the GST included in the purchase and they claim the total amount. This means you are financing the car GST exclusive. The payments on the lease include GST however as you are Salary Packaging the car through your work the GST is claimed by your employer and this tax saving is passed on to you. This is an ATO guideline used by all Salary Packaging companies.
To enable you to claim the optimum tax benefit including the GST savings Vehicle Solutions Australia adds all vehicle runnings costs to the package. These include; lease, fuel, all scheduled services, tyres, re-registration and insurance renewals. You will always be able to add or remove any of these running costs from your package at anytime.
You have a number of options;
- We can contact your new employer and discuss establishing your package with them.
- Your new employer may have already established a relationship with another Salary Packaging provider. We will cancel your package and transfer all money held with Vehicle Solutions Australia to the new provider or back to your current employer.
If your new employer does not want to take on your package, we simply cancel your package and you will be responsible to make all required payments in after tax income as you would have without salary packaging.…
As a Novated Lease is a finance lease you will be required to have a Residual Value at the end of the lease. The residual value is deemed by the ATO as a realistic value of the vehicle at the end of the lease. The reason for the residual value is that a lease is deemed to be a rental product that allows you to save tax and therefore you can not gain equity in the vehicle. The amount of the Residual Value is a percentage of the vehicle purchase price which is determined around the Australian Tax Office Residual Value Guidelines and varies according to the length of the lease as follows.
| Term | ATO Minimum Residual Value Guideline |
|---|---|
| 12 months | 63.75% |
| 24 months | 52.50% |
| 36 months | 46.88% |
| 48 months | 37.50% |
| 60 months | 28.50% |
A Novated Lease is simply a series of arrangements between a leasing company, an employer and an employee. Novated Leases are very common in Australia because the employer can make payments on a motor vehicle from pre tax salary on behalf of the employee – but with all responsibility for the vehicle remaining with the employee, not the employer.
An employee arranges a lease with the dealership for a motor vehicle of their choice and then enters into a Novation Agreement with their employer. Lease payments and other running costs are deducted from the employee’s salary.
The employer effectively becomes the lessee of the vehicle and provides it to the employee as part of the employee’s remuneration package. The vehicle may be used exclusively by the employee, their partner, family members or any one permitted to use the vehicle by the employee.
As soon as the employee leaves the employer the novation deed is broken automatically and the finance becomes an arrangement only between the employee and the leasing company, removing any risk on the employer
Simply send and email to [email protected] and we will send you a package cancelation form.
Contact Us on 1300 990 880 or [email protected].
You always have three options;
- Payout the residual value and own the vehicle.
- Trade the vehicle in at a dealership and get the dealership to pay out the residual and begin again on a new vehicle.
- Re-lease the residual value over a further term and continue to salary package.
You can Salary Package as many vehicles as your salary and employer allow. Most employers won’t allow any more than 50% of an employees salary to be packaged. You can choose any vehicle up to 5 years years old, new or used. Vehicle Solutions Australia has access through Motorbuys to find your next new vehicle at the cheapest price possible, click on “Best New Car Prices” tab on our Home Page.
You have a number of options;
- We can contact your new employer and discuss re-establishing your package with them.
- Your new employer may have already established a relationship with another Salary Packaging provider. We will cancel your package and transfer all money held with Vehicle Solutions Australia to the new provider or back to your current employer.
If your new employer does not want to take on your package, we simple cancel your package and you will be responsible to make all required payments in after tax income as you would have without salary packaging.
On signup you will be provided with access to our online management system for 24/7 access to every transaction and every payment. You can view all the payments out of your salary and see all of the payments we make on your behalf to the individual benefit suppliers.
AND
You will always have our head office staff and most importantly your local Manager to provide one on one support to change, move your package to a new employer or cancel your package.
No. That is one of the many benefits of Salary Packaging. You get the benefits of the end of year tax savings in every pay rather than waiting. So at the end of the tax year your employer will issue your Group Certificate showing your reduced pay and reduced tax. Nothing more for you to do.
Simply go to the “Employee Benefits” tab above and click on “Forms”, download the “Reimbursement Claim Form”. Complete this form, scan and email to [email protected] and we will do the rest. Pending the balance in your Salary Packaging account we will have the money reimbursed back into your bank account within 48hrs. Every claim form must be accompanied by a Tax Invoice for every expense.
Novated Lease $7.60 per week | All other Benefit Items $5.75 per week.
These employees work for what are called either PBI employers or Public Hospitals.
Refer “link to FBT Employer Types”.
When an employer provides a benefit to an employee in lieu of salary, the ATO regards this as a fringe benefit. They are non- cash benefits provided in lieu of salary or wages. In this context, by paying for your vehicle from pre-tax salary – the employer is providing you with a benefit.
A Fringe Benefits Tax (FBT) is a tax on these fringe benefits. It is designed to overcome past deficiencies in the income tax laws which allowed employees to receive part of their salary as tax free non-cash benefits.
FBT is assessed on an annual basis, with the FBT year running from 1 April to 31 March. While FBT is payable by the employer, the costs are passed on to the employee. Salary Packaging companies work this out for you and build the cost into your payroll deductions so you do not have to worry about meeting the expense at the end of each FBT year. It is the salary packaging company’s job to ensure the FBT you will pay is less than the income tax you would have paid.
There are also a number of employers that have FBT exempt dollar limits on salary packaging. This simply means you are able to salary package anything even rent, mortgages or shopping up to a limit without paying any FBT therefore completely tax free. These employers are Public Hospitals and charitable organisations.
Different employers have different ways to need to treat fringe benefits and therefore have different benefits to Salary Package. Below is a full list of benefits the Vehicle Solutions Australia offer.
Please check with your employer as to what you are entitled to.
- Motor Vehicles under a Novated Lease
- Rent | Mortgage
- Everyday Living Expenses | Travel and Accommodation | Meals and Entertainment
- All work related expenses – Uniforms, mobiles, laptops, tablets, self education expenses, memberships and subscriptions.
- School Fees
- Investment Loans
- Income Protection Insurance Premiums.
Vehicle Solutions Australia can add a car to your PBI benefits limit without it effecting your current FBT benefits. This means that the savings you make on the vehicle are added to the saving you get from Salary Packaging up to the maximum allowable limit.
Vehicle Solutions Australia will send you a complete FBT report. The report will be in two parts. Firstly the overview. This report looks exactly the same as the required ATO FBT return. Secondly we provide a report that itemises each of the employees benefits in detail.
A public benevolent institution (PBI) is distinct from a charitable institution. Generally, an organisation is recognised as a PBI if its principal objects are the relief of poverty, sickness, suffering, distress, misfortune, destitution or helplessness, and its activities are carried on without the purpose of private gain for particular people. Employees of a PBI can Salary Package (pre tax payment) up to $15,900 of benefits each FBT year.
PBI Public Hospitals and Ambulance services.
As the name suggests this includes all employees of Public Hospitals and government ambulance services. Employees can salary package up to $9,010 each FBT year.
Different employers have different benefits to Salary Package. Below is a full list of benefits that Vehicle Solutions Australia offer.
Please check with your employer as to what you are entitled to.
- Motor Vehicles under a Novated Lease
- Rent | Mortgage
- Everyday Living Expenses | Travel and Accommodation | Meals and Entertainment
- All work related expenses – Uniforms, mobiles, laptops, tablets, self education expenses, memberships and subscriptions.
- School Fees
- Investment Loans
- Income Protection Insurance Premiums.
FBT Employer Types
Different employers have different ways they treat fringe benefits. This is why some employees can package rent and mortgages and other can’t. Please refer to your employers as to what you can and can’t salary package.
- PBI Charities.
A public benevolent institution (PBI) is distinct from a charitable institution. Generally, an organisation is recognised as a PBI if its principal objects are the relief of poverty, sickness, suffering, distress, misfortune, destitution or helplessness, and its activities are carried on without the purpose of private gain for particular people.
Employees of a PBI can Salary Package (pre tax payment) up to $15,900 of benefits each FBT year.
- PBI Public Hospitals and Ambulance services.
As the name suggests this includes all employees of Public Hospitals and government ambulance services.
Employees can salary package up to $9,010 of grossed up benefits each FBT year.
- Full taxable employers.
This is for the vast balance of employers. Private companies and the balance of government staff outside of the hospitals and ambulance services fall into the full taxable category and as such have no taxable exemptions or rebates under the current ATO FBT regulations. However for employees in this category, salary packaging, motor vehicles and work related expenses generates significant savings.
Pay the expenses you would normally pay after tax including fuel, tyres, services, registration and insurance before tax and save!
For Example – An employee on $50,000 per annum, travelling 15,000 kms each year in a small $20,000 hatch will save $2,049.
That’s nearly $40 per week for paying the same bills before tax!
***Please check with your employer regarding your specific benefits.
Our service is easy to establish. Firstly, we work with your payroll and accounts departments to ensure they are familiar with the paperwork and process. This meeting takes about 1 hour and the overwhelming response is how simple the process is and “Why didn’t we do this 10 years ago?”. We then get you to issue our service rollout email to all participating staff. We will take the calls and book either group or individual information sessions. We will answer all questions on Salary Packaging. When a package is established we will issue a simple tax invoice showing the before tax, after tax, GST components, and the total. These funds are simply sent to us and we manage and pay all the vehicle accounts. And at the end of the FBT year we send you a detailed FBT report. Simple.
Our salary packaging service is free for employers, reducing administration. We offer the same efficient service to employers with 5 employees or 24,000 ;
- Local managers explaining personal plain English quotes.
- GST and FBT Reporting.
- 24/7 Online accounts access for all employees.
- Discounted fuel, scheduled services and tyres.
- Competitive finance and insurance.
No more administration?
We take away all the administration of a Salary Packaging service allowing you to focus on your business. Our service can also assist your business in removing expensive company vehicles from the balance sheet and the work from your administration team. This frees up staff and money that can be used to expand your business.
Salary Packaging is a great way to provide staff choice and benefit from reduced administration costs.
Call 1300 990 880 or go to our “Contact Us” page and one of our managers will call to discuss this great solution and provide you with tools and calculators to work out what you could save immediately.
Salary Packaging is a relative benefit in the respect that benefits gained by employees on different salaries will be relative to that person and so it is important to ensure all employees have access to this service.
ATO FBT Guide for Employers
ATO Salary Packaging Information
ATO – PBI Explanation
ATO – Novated Lease Reference
Cars under a Novated Lease
A Novated lease is a simple tri-party agreement (Finance Lease and Novation Deed) between the employee, leasing company and employer. Whilst the employee works for the employer, the employer will pay the lease payments from salary sacrificed by the employee (No cost to the employer). As soon as the employment is terminated for any reason the Novation Deed is broken automatically and the employee is completely responsible to pay the lease (remaining finance lease contract) and running costs.
Professional Indemnity Insurance
Vehicle Solutions Australia holds a current PI Policy for $10million. This policy covers all staff including contractors.
Experience
All of the Vehicle Solutions Australia staff are specifically employed from either the automotive or finance sectors. The owner of the business has over 20 years of experience in automotive finance and over 5 years of experience in Salary Packaging but most importantly over 40 years of experience in project management. Without this experience we would not be providing our service to Northern Territory Government or ACT Government.
The Australian government is trying to increase the take-up rate of electric vehicles by making them more affordable. To do this the Government has changed the Tax Act to make EVs under $91,387, 100% FBT exempt.
What does this mean and how does it compare to Salary Packaging a normal vehicle?
Employees who Salary Package an EV under $91,387 on a Novated Lease are able to pay 100% of the lease costs and all associated running costs including charging, insurance, registration, tyres and servicing before tax, which means they pay no tax, no GST and no FBT.
Prior to this legislation these vehicle attracted FBT (20% of the vehicle value excluding on road costs), which the employee paid in after tax dollars , reducing the tax savings. The new legislation allows employees can pay for the vehicle and running costs pre-tax.
Here’s how it works!
Let’s say your fortnightly gross salary is $3,000. From that $3,000 the ATO deduct $670 in tax (22%) leaving you $2,330 to spend on your living expenses including the vehicle. If you finance a vehicle with a personal/home loan you will be paying this and all running costs from the net $2,330.
The new legislation allows you to Salary Package the finance (a novated lease) and running costs before paying any tax. This means you save 22% tax. Because these payments are salary packaged you don’t pay GST, this automatically saves you an additional 10% (GST) on all vehicle costs.
Thats a 32% saving on your vehicle.
This FBT exemption applies to battery electric cars, hydrogen fuel cell electric cars and plug in hybrid electric cars (PHEV’s).
The exemption is available for eligible electric cars with a first retail price below the luxury car tax threshold for fuel efficient cars ($91,387 for 2024/25) first made available for use on or after 1 July 2022.
When an employer provides a benefit to an employee in lieu of salary, the ATO regards this as a fringe benefit. They are non-cash benefits provided in lieu of salary or wages. In this context, by paying for your vehicle from pre-tax salary – the employer is providing you with a benefit.
A Fringe Benefits Tax (FBT) is a tax on these on these non-cash (fringe) benefits. It is designed to overcome past deficiencies in the income tax laws which allowed employees to receive part of their salary as tax free non-cash benefits.
FBT is assessed on an annual basis, with the FBT year running from 1 April to 31 March. While FBT is payable by the employer, the costs are passed on to the employee. Salary Packaging companies work this out for you and build the cost into your payroll deductions so you do not have to worry about meeting the expense at the end of each FBT year.
Prior to this new legislation, EV’s were placed in the same list as all other vehicles and when salary packaged on a novated lease before tax, attracted FBT.
The new legislation states that Electric vehicles up to $91,387 retail value will be 100% exempt from FBT.
This means an employee can now salary package via a novated lease the entire lease cost, and all associated running costs before tax and enjoy the entire tax and GST saving created.
Yes, however the legislation states it would need to be a used vehicle under the $91,387 luxury EV limit that was first held and used on or after 1 July 2022.
As of January 2022, Australia has been actively expanding its electric vehicle (EV) charging infrastructure, but the availability of charging sites can vary across regions. The progress in this area depends on factors such as government policies, market demand, and private investments.
To get the most accurate and up-to-date information on the current status of EV charging infrastructure in Australia, I recommend checking with official sources such as government agencies, electric utilities, or dedicated EV charging networks. You can also explore online platforms and apps that provide real-time information about charging station locations and availability. Here is a list of some of the public apps that can show site locations, costings and availability.
Keep in mind that the situation is evolvingall the time and new chargers are currently being install, and there will be new developments and initiatives to further enhance the EV charging infrastructure in Australia.