Salary packaging is an Australian Taxation Office-approved way to use pre-tax dollars for various items. These include novated leasing, additional superannuation contributions to your chosen fund, self-education expenses, and membership fees and subscriptions.
A novated lease involves your employer deducting money from your before-tax salary to pay for regular car lease payments and running costs (with a GST discount). At the end of the lease term, you can purchase the car, upgrade to another vehicle, or return it. For more information about the ADF salary sacrifice car, click here.
Benefits
The Australian Defence Force offers many perks to its employees, including a salary sacrifice car scheme. This arrangement, or total remuneration packaging, involves agreeing to forgo part of your before-tax income for non-cash benefits. These include extra super contributions, novated leases, health insurance and expense payments. Some of these expenses are exempt from fringe benefit tax (FBT) and can be carried over if you change employers. However, they can impact your eligibility for government benefits.
In addition to saving on car purchases, a salary sacrifice car scheme can keep you on insurance premiums and reduce your taxable income. These savings can be substantial. Choosing the right vehicle for salary sacrifice depends on your lifestyle and employment circumstances. A financial planner can help you evaluate your options.
Tax savings
A car is often the second largest purchase that people make in their lives. Salary sacrifice car benefits and salary packaging can be an effective way to buy a new vehicle and save on running costs, including fuel and registration. However, these arrangements should be reviewed by a financial planner before signing on. For more information about the ADF salary sacrifice car, click here.
Salary sacrifice car schemes are simple to implement and can be managed by a third-party provider who takes care of vehicle sourcing, tax compliance, and insurance. They can also help employees with other reportable fringe benefits, such as meal entertainment and credit card expenses.
Car salary sacrifice combines on-road and car finance costs into one payment, with potential GST savings on the initial vehicle price and ongoing running costs like fuel, servicing, registration fees and replacement tyres. Employees can keep the arrangement if they change jobs during the lease term or pay out the balance and retain ownership of the car.
Flexibility
Unlike buying a car with cash, salary packaging enables you to bundle more than the vehicle price into your weekly payments (including running costs such as fuel, servicing, registration renewal and replacement tyres). You can save tens of thousands in income tax and GST by taking this option.
Despite the many advantages of salary sacrifice, assessing whether the benefits outweigh the commitment to sacrifice a portion of your gross income is essential. A reputable salary sacrifice provider like DreamLease can help you determine this, with experts ready to provide personalised advice for your unique financial circumstances.
Novated leases are only available to staff members of the University who are not casual. In addition, if you leave the University before your lease ends, you must either purchase the car for its residual value, refinance it, or return it to LeasePlan. Alternatively, you can buy a new vehicle with private finance and insurance from a dealer. For more information about the ADF salary sacrifice car, click here.
Requirements
The Australian Defence Force offers its members a range of salary packaging options. These include meal entertainment, credit card expenses, novated leasing and additional superannuation contributions. These benefits help reduce taxable income and increase take-home pay. However, certain items cannot be packaged because they attract total fringe benefits tax (FBT). These include mortgage repayments and non-work-based child care.
A novated lease is a tax-efficient purchase of a new or used car. Your employer deducts pre-tax money from your salary each pay period to cover lease payments and running costs. GST discounts offset these expenses. At the end of the lease, you can pay a residual amount to own the vehicle or upgrade to another model.
Employees should seek professional advice before deciding whether to salary sacrifice a vehicle. This will ensure the arrangement aligns with their long-term financial goals and objectives. Moreover, it will help them assess the potential impact of a salary sacrifice car on their National Insurance contributions.