With remuneration increases behind inflation, keeping costs down is vital for ADF members. One way to do this is by salary packaging a car through a novated lease.
Salary sacrifice is an Australian Taxation Office-approved payment method for a range of items with pre-tax dollars. These include extra super contributions, novated leasing and self-education expenses. For more information about the ADF salary sacrifice car, click here.
Costs
Salary sacrifice or total remuneration packaging is an arrangement with your employer to forgo before-tax remuneration in exchange for benefits. These include extra super contributions, novated leases and some health insurance payments. Some are fringe benefits tax (FBT) exempt or reportable and are usually reported in your myGov account and payment summary.
A novated lease is a three-way agreement between you, your employer and Fleetcare that lets you bundle car-related expenses such as insurance, registration, fuel/electricity, servicing and tyres into a single monthly repayment. It allows you to reduce income tax and access GST savings on those recurring expenses.
The cost of a novated lease is often much lower than other ways to buy or run a vehicle. That’s because we can get you discounts on purchase prices and because all running costs are included in the one payment. It makes a Fleet Network novated lease the clear stand-out option for ADF members.
Benefits
Salary packaging allows you to improve your after-tax remuneration by sacrificing part of your salary to pay for benefits. These can include extra super contributions, novated leases and car-related expenses like insurance, registration, fuel/electricity, servicing and tyres. These are tax-effective and can be transferred to a new employer if you change jobs. For more information about the ADF salary sacrifice car, click here.
Thousands of Australians benefit from salary packaging arrangements, including motor vehicle salary sacrifice. These are a great way to manage the rising cost of living pressures.
Fleet Network can arrange a novated lease that includes the purchase price, running costs and finance for an ADF salary sacrifice car. It is much more cost-effective than getting a personal loan or buying a car in cash. However, it is essential to speak with a professional to ensure your arrangement meets the requirements of the ADF and is tax-effective. It is also necessary to understand the effects on your other government payments. The ADF also offers the Defence Home Ownership Assistance Scheme that helps you buy your own house after four or eight years in the Reserves.
Taxes
With Fleetcare’s novated lease, the vehicle purchase price and all running costs (such as insurance, registration, fuel, servicing, and tyres) are bundled into pre-tax repayments, reducing income tax payments. You also get access to GST savings on all recurring expenses.
A novated lease is a three-way arrangement between a financier, employer, and employee. The finance supplier makes the lease repayments from the employee’s pre-tax salary, a benefit known as ‘salary packaging’ or ‘fringe benefits tax’ (FBT).
It’s essential to seek professional financial advice before making any salary sacrifice arrangement. You’ll need to know how much you can salary package and how it will impact other government benefits, such as family tax benefits or child support payments.
Finance
Salary packaging is a great way to save money on a new or used car. It allows employees to lease a vehicle from their employer, with the finance supplier making repayments from their pre-tax salary. The employee then owns the car at the end of the lease term. However, these arrangements can create fringe benefits tax (FBT) obligations.
It is essential to understand the FBT implications of a novated lease before signing up for one. It includes understanding the admin fees, the balloon payment at the end of the lease and the effect on other government payments.
It’s also worth considering a novated lease alongside other options to see how much you can save. Compared to buying a vehicle with a third-party car loan or using your home loan, a Fleet Network novated lease is the most cost-effective option for Defence members.