Purchasing a car can be expensive, so many drivers opt for a novated lease as a tax-efficient way of buying the vehicle that also saves them money in other areas.
A novated lease is a three-way agreement between you, your employer and the finance company. Repayments are deducted from pre-tax salary and may include running costs such as fuel, servicing, insurance and registration.
It’s a tax-effective way to buy a car.
Shopping for a car through a novated lease is an excellent way to cut operating costs and minimise yearly income tax payments. The finance company you work with will calculate the vehicle’s annual costs and deduct them from pre-tax salary, making budgeting much simpler.
By choosing to lease, you won’t have to pay GST on the purchase price of your vehicle – potentially saving thousands in upfront expenses. Plus, any GST savings on running costs during your novated lease term are tax deductible.
It means you can bundle all your car running costs into a regular repayment, eliminating the need to make multiple payments for fuel, insurance, servicing, registration and tyres. Furthermore, with a novated lease, you don’t have to track how often you use your vehicle since it’s all included in the finance package.
Another benefit of NovatedEV novated lease as a tax-effective method for purchasing a car is that it can be used as part of salary packaging, where your employer deducts the cost from pre-tax earnings. Afterwards, the ATO may seek to recover some of this tax through fringe benefits tax (FBT), which could be reduced or completely avoided with ECM (Employer Contribution Model).
Many Australian employees find novated leasing to purchase a car an appealing option, as it provides them with significant savings on their new vehicle. Furthermore, those needing affordable ways to get a car every 1 -5 years can find great value in using this method – not to mention all the flexibility it provides them!
It’s a flexible way to buy a car.
If you have a flexible employment situation, novated leases are an excellent option for car purchases. They may even help people save money when purchasing their first automobile.
Novated leasing is a method to finance a new or pre-owned vehicle by having your employer pay the finance company out of pre-tax salary in what’s known as a salary sacrifice arrangement. These payments cover all running costs associated with owning and running your car, such as maintenance, insurance and petrol.
Salary sacrificing is also tax-efficient, as you pay less income tax on the money saved through this finance option. Our novated lease calculator can show you exactly how much money you could save with this finance option.
NovatedEV novated lease are structured over two to four years, though you can extend or trade in your car for a brand new one. Generally, you won’t be allowed to make any modifications and must adhere to mileage restrictions and pay penalties if you breach them.
It’s a great way to buy a car.
Novated leases are an excellent choice for car shoppers searching for a brand-new model or upgrading their current one. If you’re unsure if a novated lease suits you, speak with our team about how it could benefit your situation.
Nominated leases are a more cost-effective alternative than other forms of car finance, as they don’t require deposits or depreciation payments. It makes them ideal for low-income people who may find saving extra cash for a new vehicle challenging. Plus, you can take advantage of substantial discounts on the purchase price – an enormous help for those in need.
By opting for the novated leasing option, you’ll pay less tax in the long run due to the range of benefits that come with it. These include fleet discounts on your new car purchase and associated expenses like fuel and servicing.
When purchasing a brand-new vehicle, opting for a novated lease over taking out a loan or buying outright can save you thousands of dollars. Depending on the vehicle model, this could amount to savings of $13,000 or more when paying in full versus an approximate protection of around $26,000 with a loan.