Novated lease or a car sacrifice scheme is a type of agreement you sign with your employer which provides you with transportation facilities for your work-related commutes. Novated lease gives you the financial resources from your pre-tax income to buy a car and cover all the related expenses. The terms of a car sacrifice scheme are quite different from a regular car loan because car loans provide capital from the employee’s post-tax income whereas novated loans draw money from pre-tax income. Novated loans also reduce the amount paid in taxes on the vehicle purchase. In this article, we will briefly read about how novated leases are a win-win situation for both the employee and the employer.
As mentioned above, the employee will have to pay less in terms of taxes if they have opted for a novated lease. The GST on the vehicle purchase and insurance will be significantly lower than normal. As per the agreement, the employer will take a set amount of money from your pre-tax income and pay the leasing company. As the money used for vehicle purchases is not taxed, you will most likely benefit by not paying car-related taxes.
Most people have a misunderstanding that novated loans restrict the selection of cars available to them. However, that’s not true at all. You have the liberty to choose any make and model you like. You are even allowed to choose a used vehicle if it meets their set criteria. Therefore, you can consider a novated lease for any type of car you want, but always be sure of your requirements and dedicate time to research. Doing this will help you make the right decision that will benefit you in the long run.
Novated leases offered by companies and businesses seem to be a lucrative package for employees, and most tend to apply to these businesses. Providing your employee with support does in fact improve their work efficiency and ultimately the business outcomes. This attracts potential candidates and provides them with a sense of security.
Managing a car fleet can be a daunting task for a business. Fortunately, novated leases make the car buying experience stress-free and provide an easy way of managing their transport on their own. If you are an employer, you might be wondering what if an employee leaves the job before paying up the remaining amount? The answer is quite simple. Whenever an employee leaves, the employer is not responsible for informing anyone or paying the remaining car lease amount. It will be the responsibility of the employee to follow up on the remaining payments.
Securing a novated lease is pretty simple. All you have to do is ask your employer and inform them about your plans on securing the lease. The novated lease providers also offer special discounts throughout the year that can help you realize significant savings on the vehicle purchase. There are little to no setup fees so you don’t have to worry about paying anything at all.
Novated loans are indeed beneficial for both employees and employers alike. We hope the information provided above assists you in understanding car sacrificing schemes in a better way and also in making a decision that will guarantee the best possible outcome for you.