Many employers and employees are still unclear about what salary packaging is, and what the benefits are of these arrangements. One of the key advantages of buying vehicles and making other large scale purchases through salary packaging is the tax benefits that can be enjoyed. Tax benefits of novated leasing Purchasing a car through a novated lease can work out much cheaper for employees, as the finance company leasing the vehicle is usually liable to pay GST. This means that vehicle owners can benefit from a flat 20% of taxable deductions when making payments, provided the vehicle is used for business in some capacity. Employers can also claim GST credits when offering novated leases to their employers through financiers, which can also involve a fringe benefit. Other salary packaging benefits When you arrange a novated lease, you can also enjoy tax benefits when paying for your car’s running costs, including fuel payments and maintenance. All of these standard running costs may be covered by a fuel card, which offers a single, convenient Read More
Finding out how to salary sacrifice at your organisation and informing your employers of the mutual benefits of these arrangements could allow you to benefit from novated leases and other tax efficient purchases. Benefits for employers Many employers now offer salary packaging to their staff, and failing to do so could mean companies lose out when trying to attract the best candidates for job positions. Employee satisfaction is one of the key advantages of offering salary sacrifice options to workers, as providing this level of flexibility and independence to employees can make them feel valued. Through novated leasing, businesses can also ensure that their employees have access to transport without having to invest in a company fleet. Benefits for employees Employees can avoid losing money to tax when making use of salary sacrifice through their employers or by dealing directly with financiers. Novated leasing allows employees to set aside part of their regular salary towards the cost of purchasing a new vehicle without paying GST, and this lease is fully transferrable even if you’re Read More
Peter Fitzgerald is the new lucky winner of our recent $250 fuel card raffle held at annual WA District High School conference at Burswood Entertainment Complex (sponsored by Fleet Network). He is the Principal of Donny Brook Senior High School. Congratulations Peter and all the best in future.
Arranging salary packaging options such as novated leasing with your employer can make paying for vehicles and other large-scale purchases more affordable, as you won’t lose money to tax. Cost benefits of salary sacrifice Salary sacrifice refers to agreements between employers and employees to convert part of the employee’s cash salary into benefits of equal value, but which can provide greater remuneration benefits to the employee as they will not lose as much of their income to tax. Salary sacrifice agreements are not compulsory, and are entered into at the employee’s discretion. Salary packaging examples Comparing salary sacrifice arrangements with personal financing, the financial benefits of the former become clear. One example would be a novated lease taken out to pay for a vehicle over five years, which would typically save the lessee more than $10,000 over the period in terms of income tax losses avoided. For higher value vehicles, for example a new Toyota Prado GXL Auto Petrol Wagon, salary sacrifice could save the lessee more than $19,000 over five years. Novated Read More
When you buy or lease a car, you need to carefully think about the type of insurance you take out to cover the vehicle, otherwise you may risk being underinsured in the event that you’re involved in a road accident or other incident. This video from Money Talks News explains what gap insurance involves, and situations in which this insurance option can be beneficial. Gap insurance can be particularly useful for people who are buying or leasing new cars, as this type of insurance covers the vehicle for its original worth, as opposed to the market value. When you consider that the value of a car typically drops significantly as soon as it’s driven out of the showroom, gap insurance can be an appealing prospect for cautious motorists who don’t want to end up out of pocket if the worst happens. Gap insurance reduces a motorist’s financial risk, but may not be required by all drivers, especially as the risk of vehicles being totalled in their first year is relatively low. Read More