A novated lease is an arrangement between you, your employer and a finance company. It allows you to pay for your car out of pre-tax salary.

Including your car in your salary package can save you money on both the purchase price and ongoing costs. You’ll also enjoy GST and income tax savings. For more information about the novated lease ATO reporting category, click here.

Salary Packaging

Salary packaging is a famous work incentive that allows you to access a portion of your pre-tax income to pay for expenses such as mortgage payments, childcare fees, car leasing or loan repayments. It can also include entertainment costs like meals or events and household expenses such as electricity, gas and rent.

You can package your salary up to $30,000 per year in a combination of these items without incurring FBT. FBT is only payable on the amounts that exceed your concessional tax threshold of $25,000 or less.

You must assign reporting categories for your wage, deduction and paid leave pay items as part of the STP Phase 2 transition process. These categories tell the ATO how to treat each type of payment. For example, salary sacrifice into super will need to be reported as an Employer-level additional super amount rather than a RESC (Reportable Employee Super Contributions) amount.

Fringe Benefits Tax (FBT)

FBT is a tax payable on the taxable value of non-cash benefits, commonly known as fringe benefits. This includes items such as free meals, entertainment and employer-provided car parking. It also covers the cost of various electronic devices such as laptops, tablets and mobile phones. For more information about the novated lease ATO reporting category, click here.

However, not all FBTable items need to be reported. For example, the ATO doesn’t tax employees who receive Christmas parties provided that the cost per employee is less than $300 and certain conditions are met. The ATO has also recently started to match its data with state and territory motor vehicle registries to identify vehicles for FBT audits.

If the total taxable value of your fringe benefits exceeds $2,000, you’ll be required to report this amount on your end-of-year income statement (formerly called a payment summary). Your reportable FBT amount will be used to calculate your Medicare levy surcharge, private health insurance rebate, compulsory superannuation co-contributions and Higher Education Loan Program repayments.

FBT Offsets

A novated lease is a three-way arrangement between an employee, their employer and the finance supplier for the car. Because of this, it gives rise to fringe benefits tax (FBT) obligations for the employer.

A regular amount of post-tax money is deducted from the employee’s pay to offset the FBT liabilities incurred by a novated lease. This is known as the Employee Contribution Method (ECM).

By using ECM, you can reduce the taxable value of your novated lease to zero and avoid any potential FBT liability at the end of the FBT year. In addition, you may also be able to claim GST on running costs like fuel and servicing. This can further reduce your novated lease total cost. However, it is essential to note that claiming GST can potentially affect your cash flow. It is recommended that you seek advice before choosing this option. For more information about the novated lease ATO reporting category, click here.

Tax Planning

As the 2021 calendar year hits the halfway mark, the ATO continues its playbook of targeting individual taxpayers and squeezing every last tax dollar. The ATO has recently announced a new data-matching program that will target employees with novated leases to ensure they are not overclaiming fringe benefits.

By salary packaging a car through a novated lease, you can include all the vehicle’s running costs, including fuel or electricity, into one regular monthly payment – which means you can save on income tax and Fringe Benefits Tax. This is a popular way for teacher assistants, nurses and other public sector workers to lower car ownership and running costs.

With our simple online calculator, SG Fleet can help you determine if a novated lease is right for you. However, seeking independent legal, financial and tax advice for any arrangement you are considering is essential.

Car leasing Adelaide is a simple process and is not as confusing as it may seem. Many car leasing agencies categorize vehicles according to their class and capacity. This way, you don’t have to worry about choosing a specific model or size, as the agency will pick the best one for you based on its class and price.

Applicants must have a credit card to make payments and a valid driver’s license (international drivers must have an international driving license). In addition, you must check the insurance policy to ensure that it includes collision damage liability coverage. Novated leases are three-way agreements between you, your employer, and the leasing company. For professional car leasing Adelaide services, check out www.vehiclesolutions.com.au/can-anyone-have-a-novated-lease-in-adelaide. 

Novated leases are a great way to finance a new or used car. This loan allows you to pay for the vehicle with a pre-tax salary, reducing your taxable income. You also have flexibility in choosing what type of car you want. You can use it for business or personal purposes, and the lease is easy to manage.

While a novated lease may not suit everyone, it can make sense if the pros outweigh the cons. It benefits employees because payments are taken out of pre-tax salary, resulting in lower taxes at the end of the year. However, it is crucial to understand that costs are associated with using your money, so you should research and determine whether it’s the right option.

They allow you to claim back the GST.

Car leasing Adelaide offers you several tax advantages over conventional car ownership, including tax-free car payments. As long as you use your vehicle for business purposes, your payments are 100% tax-deductible. And since interest rates on car leases are relatively low, you can tailor them to your business needs and budget. In addition, fully-maintained car lease deals take the hassles of maintaining a fleet out of your hands.

In addition, car rental fees are eligible for GST claim if you use them for business purposes. It means you can claim back up to ninety per cent of the GST you paid. While the percentage varies depending on your business, it is usually around ninety per cent. You may need to keep logbooks of your business expenses for tax deductions. For professional car leasing Adelaide services, check out www.vehiclesolutions.com.au/can-anyone-have-a-novated-lease-in-adelaide. 

They are cheaper than buying a car outright.

Purchasing a car outright may be the easiest way to purchase a new car, but leasing also has many advantages. For one thing, there is no deposit required. Also, you don’t have to worry about paying high-interest rates. In addition, car leases are tax-efficient as the lease payments are tax-deductible for the entire lease term. Lastly, car leasing companies purchase vehicles in bulk and offer them at a lower price than individual car buyers.

Another advantage of leasing a car is that you can choose what car you want, which makes it cheaper than purchasing it outright. If you aren’t sure what type of car to lease, read up on the various options available. For example, a lease with a higher residual value is a good choice if you’re looking for a car that can go for a low monthly payment.

They are convenient

Car leasing Adelaide is convenient for several reasons. It is a cost-effective way to finance a new car and can provide better tax benefits. In addition, car lease deals often include service and maintenance bills and fuel cards. The lease term can be customized to meet the needs of the business. It also takes the administrative burden of running a fleet off your shoulders.

Business people will find car leasing Adelaide convenient because they can claim GST on up to 90% of the total cost. It is especially beneficial for small business owners as they will not have to pay to administer a fleet of cars.

They are affordable

If you’re considering leasing a car in Adelaide, you’ll be pleased to know several options are available. In addition to offering excellent affordability, car lease deals in Adelaide also offer significant tax benefits and quicker application times. So whether you need a personal vehicle or a fleet of cars for your business, car leasing Adelaide is a great option.