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.

Electric vehicles (EVs), such as Tesla Model 3 and Mitsubishi Outlander, do not use fuel engine parts but instead draw their energy from an electric battery pack, making them low-emission vehicles.

Novated leasing allows you to salary package an EV or PHEV. It saves on costs such as rego, comp insurance and servicing – not to mention potential tax benefits like FBT exemption on eligible EVs and PHEVs! Learn more about EV novated lease vs buying outright.

1. Save Money

One of the primary advantages of an electric vehicle’s novated lease is its potential savings potential. Unlike car loans with payable interest payments, novated leasing uses the pre-tax income to cover vehicle and running costs such as electricity usage and servicing, maintenance and registration (NSW) costs included in your monthly payments.

Electric vehicles (EVs) offer lower operating costs than traditional petrol cars, making them even more cost-effective. New battery electric and plug-in hybrid vehicles qualify for FBT exemption, saving thousands annually through novated leasing arrangements.

Electric vehicles (EVs) are more reliable and require less maintenance. However, like any vehicle, they will still require regular visits to a mechanic for oil changes, tire rotation and general repairs. But when these visits do come, they tend to be much cheaper due to having smaller engines with fewer parts to keep them in good working order.

At the end of your lease term, another way you could save is to opt to buy the EV outright at its projected book value if it falls below your contractual purchase price. Most novated lease agreements offer this feature, and you can acquire your vehicle at this discounted price.

2. Reduce Emissions

Electric vehicles produce far fewer greenhouse gas emissions when driven, making them an excellent option for those concerned with climate change and those looking to cut costs on fuel and maintenance expenses. Depending on vehicle type, electricity rate, and charging location, they may cost approximately $10 less per 100km. Learn more about EV novated lease vs buying outright.

With more EVs on the market and charging infrastructure expanding, green driving is easier than ever. Novated lease customers may save more with the Electric Car Discount that exempts such vehicles from FBT when leasing through employment arrangements.

Electric vehicles (EVs) tend to be more reliable and easier to maintain than their petrol-driven counterparts, requiring no oil changes and having fewer parts that wear down over time. Plus, refuelling an EV often works out cheaper than filling up at a gas station.

Due to FBT exemption, Electric Vehicle Discount, and other state/federal incentives, electric vehicles have become more cost-effective to own thanks to leasing through employers or taking advantage of lower operating costs and reduced emissions associated with them. EVs have quickly become appealing among employees leasing from employers or businesses who want to take advantage of lower operating costs and emissions associated with these vehicles.

3. Get a New Car Every Two or Three Years

As the EV market expands, new models with ever-increasing capabilities are coming. If you opt to lease instead of buy, switching models won’t require having to sell off your current one and sign a separate contract; all that needs to happen is turning in your car and signing on with another lease provider.

Novated leasing offers another cost-cutting way to secure an electric vehicle – through tax-deductible salary sacrifice; your employer pays for everything, including running costs, registration, insurance and maintenance through one tax-deductible arrangement – This means no GST is payable about its purchase price and ultimately lower income tax bills overall.

4. Get a Better Deal

Electric vehicles (EVs) are becoming more mainstream across Australia, offering motorists leasing and purchasing options when looking for their next ride. But which option will work best for you?

Novated leasing of an electric vehicle can be an efficient way to save on purchase price, electricity usage and running costs. All expenses can be included in one tax-deductible monthly payment, making low-emission vehicles even more affordable! With government incentives like the EV Discount now more accessible than ever – now is the ideal time to lease or purchase an EV!

The tax benefits of a novated lease residual value are often a key benefit when negotiating a new contract. In addition to this, a novated lease can have other benefits, such as reducing out-of-pocket expenses. This article will go over the options for negotiating the residual value of a novated lease, as well as common sources of novated lease residual value. Regardless of the agreement type, here are a few ways to calculate novated lease residual value.

The value decreases as the lease term goes on, and the longer you keep it, the lower its residual value. In other words, if you lease a car for three years for $3000, you’ll end up with a car worth only $15,000, and that’s all. So what is residual value? It’s the difference between the original MSRP sticker price and your lease payment, plus any taxes you’ll owe.

Calculating novated lease residual value

In the industry, calculating a novated lease residual value is important for evaluating the financial risk of leasing a vehicle. Residual value refers to the projected value of an asset at the end of its useful life or the lease term. This value is often used when leasing a car and plays a major role in the monthly cost of leasing a vehicle. Let’s look at how the residual value is calculated.

The term residual value is often used in automobile leasing. Knowing how to calculate residual values before signing a lease is important. In many cases, residual values are high because car manufacturers are in the business of selling cars. Because residual values are high, car makers can keep payments low by artificially inflating them to make the deals look attractive. Because of this, many leased vehicle consumers are unaware of how to calculate their lease residual value.

Options for negotiating novated lease residual value

There are several options for negotiating a novated lease residual value. The value is based on the residual percentage of the MSRP of the vehicle. For example, a car with a residual percentage of 60% has a value of $13,800. Using this formula, the monthly payment would be $2,040. However, if you do not plan to buy the car at the end of the lease, you may want to negotiate a higher residual.

One way to negotiate the lease’s residual value is to negotiate the length of the lease term. Usually, leases last between 24 to 60 months. Some lessors offer leases longer than 60 months, but others may offer 39-month leases. Even if you are buying the car, you will still have to pay early termination fees, ranging from $200 to $500. Other costs can include financing arrangements and name change fees.

Tax benefits of novated leases

The Australian tax office recognizes the many tax benefits of a novated lease. While this method of financing your fleet is limited to Australia, it could benefit many other countries. A novated lease can also benefit your employees, thanks to its three-pronged benefits. The most obvious of these is fleet discount pricing. It can also work with fuel cards, which saves you money.

Because your employer is paying for the lease, you don’t have to worry about paying for running costs or paying for registration. Unlike a car lease, a novated lease residual value doesn’t transfer ownership to the employee. This makes it easier for the employee to budget expenses such as car insurance. Further, the novated lease doesn’t require a down payment. Instead, the employee pays for the car through salary sacrifice. In short, your employee pays most of the vehicle’s operating costs out of their post-tax salary.

Common sources of novated lease residual value

As you’ve probably guessed, residual value is one of the most important aspects of leasing a vehicle. Otherwise known as the balloon payment, this payment is required by the Australian Tax Office (ATO) at the end of the lease term. The ATO provides a scale of minimum residual values that leases can receive, but in most cases, these values are far higher than they’re worth. After all, vehicles typically sell for much more than their residual value.

The value of your car after a novated lease is the residual percentage of its initial purchase price. The value decreases as the lease term goes on, and the longer you keep it, the lower its residual value. In other words, if you lease a car for three years for $3000, you’ll end up with a car worth only $15,000, and that’s all. So what is residual value? It’s the difference between the original MSRP sticker price and your lease payment, plus any taxes you’ll owe.