On the hunt for new wheels in the new year but don’t think you can afford the car you want? With novated leasing, getting a new car and saving money are two resolutions you can realistically achieve. You get to choose the car you want, reduce your taxable income and can improve your overall cash position.
Leave GST behind
One of the first big savings you’ll enjoy with a novated lease is you don’t pay GST on the overall purchase price of your new car. This saves you thousands of dollars upfront. For example, if you were to lease a new Mitsubishi Pajero Sport, the drive away price is around $43,940. The GST on this would be roughly $3,763. This would immediately bring the overall price your lease payments are calculated on down to $40,177. Just note that there are GST thresholds so check with your provider as to how much you can save.
A novated lease is not a car loan. While this type of lease is a finance arrangement between you, your employer and a finance provider, interest is less of an issue. Novated leases are structured to save you and your employer money, not make banks and financiers richer.
Tax on, tax off
A fully maintained novated lease includes your car running costs as part of your salary deductions. Because your novated lease accesses your pre-tax salary to cover them, you’ll save a small fortune when it comes to keeping your car running. That means when you book in for a service or go to fill up, you don’t have to dig into your take-home pay. Just imagine pulling up to the petrol station and paying with a supplied fuel card, or not baulking at the estimate for your annual service.
If that wasn’t enough good news, a novated lease will cover expensive necessities such as registration and insurance. You can even claim new tyres and professional car cleaning services. Perhaps most importantly, knowing you won’t have to pay the full price on car maintenance will ensure you never put off car servicing. This will keep your family safer on the road.
In addition, with a Novated Lease, your employer can claim any GST on your car running costs from the ATO and pass these savings on to you. Even more GST savings!
Saving all the way
When you get to the end of your novated lease there are even more tax savings to come.
Through a novated lease, you’re only financing the difference between the original car cost (less the GST of course) and the residual value of the lease, which is a final payment that needs to be made at the end of the lease term. Overall, this results in lower monthly payments when compared to other car finance or loan options where you pay down 100% of the car purchase price, from your after-tax pay.
When you reach the end of your lease term, there are a number of options for dealing with the residual value. You can make the final payment and own the car, you can trade-in your car on a new one and start a new lease or you can extend the lease for an extra period. You can even sell your car privately, so long as you pay the residual value. As a final benefit, any profit you make on the sale price compared to your final payment is yours to keep, tax-free!
Save big with The Salary Packaging People
We’ve helped thousands of employees enjoy the confidence of a new car while saving thousands of dollars on a novated car lease. Contact us or call 03 5229 4200 and talk to someone today.