1. Tax Advantages
Under a Novalease™, your employer is able to deduct a portion of the overall vehicle financing and running costs from your “pre tax income”. This reduces your overall taxable income and reduces the amount of income tax you pay.
Income tax savings are one of the main reasons so many corporate and government employees are using novated leasing to purchase their motor vehicle.
The portion of expenses that is allowed to be deducted from your pre tax salary depends on the value of the vehicle and the amount of kilometers you drive. Our specialist Account Managers can structure a quote based on your exact circumstances and will run through it with you to determine your tax saving and the cost of packaging the car of your dreams.
NOTE: Novated leases do not require any business use, so under current tax laws this is the most cost effective method to purchase and run a car.
2. GST savings
Another reason so many employees are taking advantage of a Novalease™, is the fact that GST in relation to the vehicle purchase, lease payments and running costs are not passed onto the employee.
Under a Novalease™, the car is being purchased and operated net of GST, providing a 10% saving in addition to the income tax savings and fleet discounts that also apply.
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You pay NO GST (up to the luxury limit of $57 180) on your vehicle purchase price
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You Pay NO GST on fuel purchases
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You pay NO GST on any of your servicing costs, parts or labour
If applied to an expense such as petrol and you are effectively receiving a 10% “discount” on the retail price of fuel, which is a significant saving.
Now add the tax saving (derived because fuel forms part of your novated package) and the savings really start to add up. It makes a 4 cent per litre fuel docket look small.
Let’s take a moment to look at how the GST saving applies to the vehicle purchase.
If a new car has a drive away price of $33,000 including GST, the employee only finances $30,000 under the lease, because the GST is not passed onto them.
The flow on effect is that finance payments are now only calculated on $30,000, not $33,000 and the GST on the monthly finance payment is not passed on either.
Saving 10% off your next vehicle and its running costs is reason enough to novate a vehicle, add the tax saving and fleet discounts and your savings compound.
3. Fleet discounts
sgfleet manage tens of thousands of vehicles and have negotiated discount rates for vehicle purchasing, servicing, repairs and tyres, with hundreds of major suppliers throughout Australia.
All savings are passed back to our clients, providing further savings over and above the GST saving of 10% and the income tax savings.
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