Novated leasing of cars is a common method of acquiring a car in Australia. There are many novated leasing companies that operate in Melbourne alone. It basically consists of three different parties making a deal. An employee, his or her employer, and a leasing company. The employer will take on the lease responsibilities of the employee, and will often make the payments on their behalf. The benefits of novated leasing for an employee as well as the employer are well worth it.
Income tax savings
- The employee has the possibility of some income tax savings because depending on the type of vehicle, the mileage on it, and the employee’s salary, it can attract what is known as Fringe benefits tax. This is perhaps not the top benefit of leasing a car this way simply because it is not absolutely concrete if an employee will get the benefit or not.
- When leasing a car in this way the employee can earn savings on the Goods and Services tax, which is incurred on a vehicle expense in other cases. The savings here are more than just potential in comparison to the possible savings on the income tax.
Get your car sooner with novated leasing
- Here is something rather motivating. In going into a novated leasing plan, the employee gets the chance to lease and drive a car of their choosing, which is exceptionally different from a regular company car arrangement. For novated leasing click this link. Who wouldn’t want to choose their own car and have their employer be responsible for it?
Keep the car
- Another way this is different from getting a company car from the employer is that the employee gets to keep that car if they ever leave their current job. The lease can be transferred to another employer in the case of a career move, making it a much simpler process than the hassle of having to return a car and look for a new one.
Employer car finance benefits
- The employer has some great benefits as well. For example, when using 1alp.com.au car finance, the employer does not take on any of the risks, and it is much cheaper than owning and operating a fleet of company cars. This way the business can in a way increase their employee’s benefits at almost no cost the company.
It’s a wonder that this type of car leasing it not more widespread in the US because of all the potential benefits that come along with it, but it is common in places like Australia, the UK and Japan. Novated leasing is an easy way for both the employee and employer to deal with the trouble of having a company car because there are benefits for both parties in the arrangement, without any drawbacks.