A Novated Lease can be a tax effective way of driving a new car which is also available to those who are using the vehicle for personal use. All other commercial car finance products, require that they vehicle is being used wholly or predominantly for business use.
Here are some good reasons to consider a Novated Lease if it is available to you, the next time you are in the market for a new car.
Reason 1 – Reduce Your Taxable Income
As a Novated Lease Agreement can be deducted from your salary prior to you being taxed, they can reduce your overall taxable income with each and every pay, which can also be appealing as you don’t have to wait for the end of the financial year to claim back your tax in your income tax return.
Reason 2 – Your Employer Makes The Repayments
You don’t have to worry about direct debit payments coming from your bank accounts and making sure that there are sufficient funds available when your repayments are due. Your employer makes the repayments to the financier, prior to paying you your salary, so you never have to worry about your payments being made.
Reason 3 – Save On GST
As the financier calculates your rental payments on the GST exclusive amount of the vehicle, you will save on this amount of GST. There will be GST added to your rental payments and your employer may have the ability to claim this prior to salary sacrificing your lease repayment, saving you on GST on your repayments too, which also may include the running costs for the car, which could mean GST savings on fuel, tyres, maintenance, insurances, etc.
Reason 4 – Convenience
A Novated Lease can give you the option to add running costs and other various costs to your lease package. This can give great convenience as all your car costs are included in your lease repayment. Other costs that can be added to your Novated Lease are any ongoing insurances, roadside assistance, maintenance and servicing costs, fuel, tyres and annual registration costs.
Reason 5 – Flexibility
Unlike the use of a company car, if you leave your employer, you still take the car with you and continue on to make your lease repayments. Depending, you may even be able to transfer the Novation Agreement to your new employer. You would most likely be able to select your own vehicle too, and not just the vehicle that is owned by the company which may not be your preferred choice of car.