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 leases can also incorporate running costs, which may be claimed back if the vehicle is for business use, and this can save even more.
Fleet Network administers novated leases for vehicles in Broome, Geraldton, Perth and other areas, allowing employees and other persons to purchase vehicles using your tax deductions. To find out more about novated leasing and how to salary sacrifice in your organisation, call us on 08 6555 3854.