Forget the myths – you could benefit, too!
Nobody likes paying more tax or doing more life admin than they need to, which is why thousands of Australians opt for novated leasing each year.
FALSE! You could benefit with a novated lease – no matter how little you drive.
Consider this example: Frank leases a car worth $30,000 on a four-year lease term. As he works close to home he only drives his car around 15,000 kilometres each year. Based on his $85,000 annual salary (excluding super), Frank could receive a fortnightly saving of around $91 – or $2,357 each year. That’s an estimated benefit of up to $9,429 for the term of the lease.*
Imagine what you could do with an extra $9,429!
Potential savings are only possible if you enter into a novated leasing arrangement.
FALSE! You can enjoy the same potential tax savings and budget convenience on a used car as you would a new car. You can choose any second-hand make or model you prefer (subject to your employer’s policy), provided it meets the age requirements. It is subject to eligibility criteria and you can find that out by speaking with the RemServ team.
Want to hold on to your current car but keen to explore the benefits of novated leasing? Good news: you could still enjoy the convenience of a novated lease. Basically, if you own your car, or still have it on finance, you could choose to sell your car to one of our financiers and then lease it back.
This type of lease gives you all the benefits of a regular novated lease while allowing you to free up any equity you have in the car to spend on other things, such as renovations or a holiday.
FALSE! You don’t have to earn a high salary, or work in management to enjoy the potential benefits of a novated lease.** Many people on average incomes could enjoy plenty of savings through novated leasing.
Hint: When you apply for your lease,the financier will assess your finance application based on your household income,before you make any commitment.One of our dedicated leasing consultants can help explain how this could apply to your circumstances.
Consider this example: John’s annual salary is $50,000. He leases a car valued at $30,000 on a four-year term. He pays for his car and its running costs with a combination of his pre-tax and post-tax salary through a novated lease, rather than a personal loan. This gives him a potential 10% tax saving on GST on the price of the vehicle.
By salary packaging his car through a novated lease, John could save almost $91 each fortnight or $2,357 each year. When you add this up, John could save up to $9,429 in four years!*
That’s a big potential tax saving that he could put towards his household bills – or even a well deserved holiday.
**The Queensland Government strongly recommends that you obtain independent financial advice prior to entering into, or changing the terms of, a salary packaging arrangement.
FALSE! A novated lease offers you what an ordinary loan doesn’t – the complete package.
Let’s recap the potential benefits of a novated lease.
- Save with no GST payable on the price of your leased car (that’s a potential 10% saving upfront).
- No deposit needed.
- You could reduce your taxable income by paying for your lease and running costs with a combination of pre and post-tax dollars.
- Competitive pricing with our nationwide buying power.^
- Fuel cards – so you don’t need to pay with cash at the service station.
- A flexible budget for your car expenses is prepared for you upfront (and regularly monitored) by our dedicated consultants.
- Update your budget at any time.
- Expert support of our maintenance team who will ensure you don’t pay any more than is needed at service time.
Alternatively, if you were to finance your car through a personal loan or your home loan:
- You have to source your own vehicle as an individual buyer.
- You may need to pay a deposit to secure finance.
- You have to source your own finance approvals.
- You can only pay using post-tax dollars; there are no extra discounts or potential tax savings.
- You still have to budget (outside your loan) for your car’s running costs, including fuel, maintenance and roadside assistance.
- You may have to repay more interest over a longer period if you add your car to your mortgage loan.
^ RemServ’s car and insurance procurement services are optional. You may choose to use our services or those of another provider.
FALSE! If you leave your employer, you can take the car with you and remain responsible for its payments. If your next employer doesn’t offer novated leasing, you can take over the finance using post-tax repayments and continue using the vehicle.
FALSE! The car can actually be 100% for personal use, and you can still enjoy the potential tax benefits.
Our experienced team can guide you through the application process, answer your questions and provide you with a no-obligation quote.
Call us on 1300 73 14 29
You can find answers to other commonly asked questions at remservlease.com.au/faq.
*Assumptions: The estimated potential tax benefits referred to in both of the examples above are exclusive of GST and based on the assumption that you would have paid for the lease from your post-tax salary (as opposed to salary packaging those payments from your pre-tax salary or a combination of your pre and post-tax salary). Payments include car payments, fuel, registration, tyres, insurance and scheduled servicing. The estimated annual benefits will vary depending upon salary, employment circumstances, selected benefits and applicable tax treatment. The estimated annual operating costs includes estimates of fuel, maintenance, tyres, registration, comprehensive insurance and fleet management fee and are exclusive of GST. GST of 1/11th is payable on your Employee Contribution Method (ECM) contributions. The benefit of Input Tax Credits may be passed onto you by your employer. State Stamp Duty rates apply. PAYG tax rates effective 1 July 2020 have been used.
The implications of salary packaging a motor vehicle through a novated leasing arrangement, including tax savings will depend on your individual circumstances. The information in this publication has been prepared by RemServ for general information purposes only, without taking into consideration any individual circumstances. RemServ and the Queensland Government recommend that before acting on any information or entering into a novated leasing arrangement, you should consider your objectives, financial situation and needs, and, take the appropriate legal, financial or other professional advice based upon your own particular circumstances. You should also read the Standard Novation Agreement, Salary Packaging Participation Agreement and the relevant Queensland Government Salary Packaging and Novated Leasing Information Booklets and Fact Forms available via the Queensland Government Arrangements Directory. The Queensland Government strongly recommends that you obtain independent financial advice prior to entering into, or changing the terms of, a salary packaging arrangement.
Conditions and fees apply, along with credit assessment criteria for lease and loan products. The availability of benefits is subject to your employer’s approval. RemServ may receive commissions in connection with its services. Actual vehicle price is based on specific vehicle and accessories, prices and savings may vary based on additional options selected with vehicle. RemServ does not act as your agent or representative in respect of the purchase of any vehicle. RemServ does not provide any advice or recommendations in relation to the purchase of any vehicle.
Remuneration Services (Qld) Pty Ltd | ABN 46 093 173 089