Millions of Australian drivers got a shock recently at the fuel pump when fuel hit $2.00 (or more) a litre. The price of fuel here is affected by global markets, and due to events unfolding in Russia and Ukraine, prices around the world have become a pain point for drivers. Given most of the population is returning to offices post-pandemic, the price rise is hitting commuters hard. The effects of such increases don’t stop at the pump though, with family budgets being overly stung at a time when the cost of living is severely increasing.
So what is the solution? Even though the world is gradually shifting to hybrid and electric vehicles, fuel is still an essential part of daily living for drivers. What you may not know is that a novated lease will not only reduce your fuel costs but save on a whole host of other expenses as well.
How do you pay less for fuel?
Imagine that every time you fill up, you get a discount. This is the beauty of a novated lease. This is a type of arrangement where your car lease and running costs are paid via your employer. Because the repayments are made using your pre-tax (and possibly some of your post-tax) salary, you won’t pay tax on your everyday car costs, including fuel. It’s not hard to set up either. Simply talk to your friendly salary packaging provider to start looking at vehicle options.
How much will you save on fuel?
While everyone else is trying to make the most of the last few drops in the tank, you can pull into the fuel station with confidence. The savings will vary slightly depending on your income, but generally, you can expect to save about 30% every time you fill-up. This makes a significant difference to your home budget, especially when fuel prices hit the roof. Not only can you top-up without worrying about the fluctuating number on that LED sign, but you can also use your issued fuel card wherever you choose. This gives you a discounted fuel capability in the palm of your hand. You can also claim fuel costs later if for some reason you don’t have your fuel card handy. Anything you don’t spend out of your fuel allowance will also be credited back to you, so don’t worry if you suddenly find yourself working from home again without the need for regular fuel.
The fuel savings add up
Obviously, fuel prices fluctuate from day to day, but with a novated lease, you’ll save no matter which day of the week you fill-up. Here are some examples of how much you’ll save at the pump weekly and monthly.
By saving fuel, you’ll pay LESS tax
Yes, you read that right. Not only will you be saving a bundle on keeping your fuel tank topped up, but a novated lease will help you to pay less tax on every pay cycle. Because your novated lease deductions are from your pre-tax salary, you are only taxed on your remaining taxable income. As your take-home pay is slightly less after your deduction, your tax payable amount is reduced. Check out our novated lease page to find out more.
Switch to an EVP on a novated lease
If you’re looking to avoid the fuel pump altogether by switching to an electric vehicle, but have been delaying your purchase due to price, a novated lease can set you up with a new EVP for less. As long as the vehicle you choose is less than 10 years old at the end of the lease term, you can opt for the latest electric or hybrid vehicles. Yes, that includes Teslas. Your novated lease will not only save you money on costs like registration, insurance and servicing, but you won’t pay GST on the purchase. It’s the smartest way to get a new car and avoid rising fuel costs in the long run.
Start saving with a novated lease
Get on the road for less with The Salary Packaging People, Western Victoria’s premium provider of salary packaging services. Contact us online or call 03 5229 4200 to discuss your options today.