Novated Leasing
A novated lease is a three-way vehicle finance agreement between employee, employer and the financier. Effectively, the employee pays for the lease of their car by salary sacrificing a portion of their pre-tax income. Loan payments, running costs, lease management fee and Fringe Benefits Tax (FBT) can largely be deducted from pre-tax income. The FBT liability can be offset by using the employee contribution method (ECM) which involves taking a portion of your lease payments from a post-tax environment.
The benefit of this arrangement for an employee is that they pay less tax, and can often save money on the costs of their vehicle. For employers, they are able to offer their staff an attractive benefit at no additional cost to their business.
We help clients in all aspects of this process, including in determining whether it’s the most appropriate funding solution.