How Does a Salary Sacrifice Work?
Salary sacrifice is another term for novated lease, which can be considered a perk for being employed since it is commonly integrated into the salary package. In a novated lease the employer pays the monthly payments directly to the finance or fleet company through payroll deduction before taxes.
This monthly amount also includes operational vehicle costs like tyres, maintenance, re-registration, insurance premiums, and even petrol! This is done via a fuel card which is used for all car related expenses
Here’s how salary sacrifice works:
Reduce Your Taxes
The term salary sacrifice sounds very much like a misnomer as the employee stands to gain much by entering into this transaction instead of buying a car from a dealer. The main benefit, of course, is in the reduction of taxes, since this amount is coming out of the gross wage. To explain further, with current tax legislation, the fringe benefits tax or FBT is at 20% of the FBT value of the vehicle (or cost of the car plus GST) for most people. (For more info on taxes, check out Vehicle Solution’s website.) It is a significant saving on taxes for those who participate. Where is the sacrifice there?
Get Car of Your Choice by Completing the Paperwork
Choose the car you want, get it approved and sign paperwork. Then every month, or at regular intervals, the employer makes the payments directly to the novated leasing outfit or the service provider from your salary for as long as you remain an employee of the company.
What Happens When You Terminate Your Employment?
If or when you leave the company for any reason, the responsibility for the car reverts to you until the time you re-novate your lease to your next employer.
What Happens at the End of the Lease Term
At the end of the lease, trade your vehicle for another car, sell it privately or even auction it off through an auction outfit to take care of the residual value. As long as you pay the residual value – you can even keep the car if you really love it!
Work Only with the Experts
One other thing you’ll also love is working with Vehicle Solutions. Their service is premier, and their friendly, helpful and knowledgeable staff will help you through the whole process from getting more info about what a novated lease is, all the way to the service maintenance on the car you have chosen.
Are you ready to take advantage of salary sacrifice on a new car? Are you ready for a novated lease? Check out Vehicle Solutions’ online calculator or get a no-obligation quote without submitting any personal detail by merely filling out their online form.