Should I lease a car?
If you are thinking of purchasing a new car you may want to think about taking out a novated lease. Not only are there tax benefits through salary packaging but you can get significant discounts on maintenance, repairs and fuel .
What is a Novated lease?
A novated lease is an arrangement between an employer, employee and a car dealer. The employer provides the employee with a car leased from the dealer. The employer pays the lease out of their employees pre-tax salary.
What are the benefits to an employee?
As an employee you can save thousands of dollars a year on your tax through a novated lease. Because the lease payments are made pre-tax, your income threshold could be reduced. You will, however, need to pay fringe benefits tax. The cost of maintenance, repairs, registration, fuel and insurance is also payed pre-tax and at a reduced rate.
What are the benefits to an employer?
If you are an employer you can provide a car to your employee with no cost to you. The car also does not need to be reported as an asset or liability and you can deduct the cost of the lease retail payment and claim input tax credit on GST paid. If the employee leaves the company before the lease is finished, the employee is then responsible for the further payments so you don’t need to continue paying for a car that is not in use.
Contact us to find out how you can lease a car
The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.