(last updated 23/04/2014)
Many people utilise salary packaging options to minimise tax. A very common option when using this strategy with motor vehicle fringe beenefits is a Novated Lease.
Tax savings associated with salary packaging a motor vehicle, whether it is with a novated lease or other finance arrangements, can range from $40 per week and higher.
For further assistance with fringe benefits tax please contact our this office at your convenience.
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A benefit of using eZtax, our web based tax return app, is we have the genuine online tools, knowledge and experience to get the best tax refund for our clients, making it easy to complete your annual tax return online.
Our Web Based Tax Return App will step you through all the necessary questions to increase your tax refund and take into account all relevant tax deductions and tax offsets. Try it now. Its FREE to get started!
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Many people utilise salary packaging options to minimise tax. A very common option when using this strategy with motor vehicle fringe beenefits is a Novated Lease.
Novated lease
Simply put, a novated lease is a finance arrangement between a full-time employee, the employer and a motor vehicle finance provider where:- the employee is the lease holder and owner of the vehicle and
- the employer has a legal obligation to pay the lease payments out of the employee's pre-tax wage.
Benefits to the employee
- Income tax savings - the related car expenses are paid from your pre-tax income. That means your taxable income is lower resulting in less income tax you have to pay.
- Free GST - your employer claims back most of the GST on purchase of the vehicle on your behalf.
- Budget your money - when combined with running costs, the Novated Lease payment is fixed for the duration of the lease arrengement which helps maintain a steady cash flow.
- Tax Free Profit - at the end of the lease, if you sell your vehicle and make a profit, this profit is tax free.
Benefits for the employer
- No or minimal additional costs - It is an effective method to increase an employees’ salaries with no or minimal cost to the employer.
- Effective management - where the running costs of the vehicle are rolled into the Novated Lease arrangement, it is potentially a cost effective choice to operate a fleet of company vehicles that are owned by the employees.
- Low risk - the company does not assume any additional risk for the vehicles as they are owned by the empoloyee
- The employer can claim GST on the purchase price and running costs of the vehicle, even though it is owned by the employee.
Who will Qualify
Everybody who is gainfully employed can qualified to salary package a car (the only exception is if you are self-employed or a temporary contractor).Tax savings associated with salary packaging a motor vehicle, whether it is with a novated lease or other finance arrangements, can range from $40 per week and higher.
For further assistance with fringe benefits tax please contact our this office at your convenience.
Related posts:
==> Changes to FBT rates - 2011 Federal Budget
E-tax Return
See these posts with tips, calculators and checklists to help you prepare your eTax Return (and get a better refund) with less hassle:- checklist of eTax and Assessable Income
- checklist of eTax and Allowable Deductions
- eTax Return Checklist
A benefit of using eZtax, our web based tax return app, is we have the genuine online tools, knowledge and experience to get the best tax refund for our clients, making it easy to complete your annual tax return online.
Our Web Based Tax Return App will step you through all the necessary questions to increase your tax refund and take into account all relevant tax deductions and tax offsets. Try it now. Its FREE to get started!