What is the Employee Contribution Method?

If you choose a novated lease on your next vehicle purchase, the Employee Contribution Method (ECM) can help you reduce your overall costs even further.

How to Take Advantage of the Employee Contribution Method

In May 2011, the federal government made changes to the operation of the Fringe Benefit Tax (FBT)As a result of these changes, employees who take out novated leases are liable to pay more in FBT to offset the tax savings they make through salary packaging.

The ECM allows you to recoup some of the extra FBT that you would otherwise have to pay under this new arrangement. It enables you to reduce your FBT by contributing a portion of your net salary towards the cost of running your vehicle. Every (net) dollar you spend towards fuel and other running costs reduces your payable FBT by a dollar.

FBT is calculated at the highest end of each tax bracket. This means that, unless your taxable income places you at the high end of the bracket, using your net income to offset the FBT through the ECM will work out to be cheaper than simply paying the FBT. Fuel and vehicle maintenance costs (repairs, servicing, etc.) are then paid for with a fuel card, according to a pre-calculated overall running cost estimate.

Not all employers offer the ECM so please check with yours to see if this option is available to you.

Patrol ST Diesel in Platinum - USED 24 4 12

Novated Leases in Australia-wide

To arrange a novated lease for your next car purchase, contact Fleet Network on 1300 738 601. Fleet Network can advise you on the most cost-effective way to for you to take advantage of the benefits of the ECM. We service areas across Australia like Geraldton, Mandurah, Broome and Perth.