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How to Save Tax with a Novated Lease
Novated leases have become an increasingly popular way for employees to buy a new car, largely due to the amount of tax benefits involved. A novated lease is an agreement between an employer, employee and a vehicle financier. A novated lease also provides the employee with the means to salary sacrifice their income in order to pay for their car over a period of time.
Novated lease pre-tax benefits
It’s due to salary sacrificing that a number of novated lease tax benefits come to the fore. Because you’re paying for a vehicle in pre-tax dollars, you are able to enjoy a lower rate of tax. If you were paying for the vehicle another way, you’d be subjected to increased tax and therefore would end up paying more for the car. Ultimately, novated leases save you tax money.
Fringe Benefits Tax (FBT) for Novated Leases
Because Novated Leases are considered an employee benefit, users may be open to the Fringe Benefits Tax (FBT). Salary packaging involved in novated leasing is concessionally treated as a part of the Fringe Benefits Tax, making it a tax-effective way to buy a car.
If you are looking into a novated lease, the tax benefits on offer ensure that your choice will be a cost-effective one. When it comes to novated leasing, Automotive Lease Packaging are Australia’s number one professionals – our team of experts will be able to advise and guide you throughout the process with absolute efficiency.
If you have any more questions about novated lease tax benefits call 1300 309 343. You can also use the novated lease calculator provided by us.