Novated leasing and salary sacrifice are excellent ways to get a new car through work. But there are some key distinctions to consider when determining your best choice.
Salaried-sacrificing a vehicle through your employer provides access to tax savings and fleet discounts. Deductions come from pre-tax salaries while running costs are GST-free due to Input Tax Credits that the finance company can claim back on behalf of your employer. Get more information about novated lease vs salary sacrifice.
1. Tax savings
Tax savings that can be realised through a novated lease are undoubtedly worth considering when shopping for your next car purchase. Plus, you’ll have more vehicles, ensuring you find one that meets your needs and budget.
A novated lease allows you to finance a vehicle using pre-tax dollars, helping reduce your annual income and tax obligation. Plus, any GST paid can be claimed as an input tax credit, lowering the overall cost and making leasing cheaper than buying outright.
Another advantage of a novated lease is that you can pay for running costs through your monthly payments, which are usually combined. It could include servicing, fuel, insurance and registration fees as well. Furthermore, with many novated lease options available today, switching cars every few years could benefit your budget.
No novated leasing arrangement can provide numerous advantages, yet some misconceptions surround this scheme. For instance, some people believe you must be on the highest marginal tax rate or travel a specific number of kilometres to maximise its advantages.
While these are valid points, they should not be the only factor when deciding if a novated lease suits you and your business. You should also consider potential benefits it could bring, such as improved employee morale and loyalty.
A novated lease can efficiently manage your employees’ work-related travel and fleet management expenses and save on overheads and running costs for your business. However, you must partner with a reliable novated lease provider and negotiate competitive fee structures that keep prices low.
2. Flexibility
When considering a novated lease or salary sacrifice for your next vehicle, you should weigh all these options’ advantages. With careful planning and some luck, you could reduce tax bills, save money on fuel expenses and enjoy owning your new vehicle with peace of mind.
At Southgate, we partner with a wide selection of premium lenders to find the ideal salary-sacrificing novated lease for you, your company and your budget. We take the time to understand your objectives, needs and aspirations so that we can suggest the most suitable car financing solution.
We’ll also offer you the most competitive rate on your novated lease so that you can reap all the savings for however long necessary. Plus, our team will assist in creating a repayment plan tailored to your lifestyle and budget.
For a free comparison quote on your next lease, fill in our online enquiry form, and we’ll contact you shortly.
One significant distinction between a novated lease and salary sacrifice is that the former uses your pre-tax income to cover costs associated with owning and operating a car. At the same time, the latter only pays out when you sell it. It can substantially affect overall take-home pay, especially for higher earners.
3. Convenience
Salary packaging with novated leases is an excellent way to offer your employees a tailored and flexible car financing option. They can get the car of their dreams at no additional cost through simple monthly repayments.
Employers, providing novated leases to your employees is an effective way to stand out from competitors and attract top talent. It also serves as an excellent opportunity to reward staff members and demonstrate that your organisation values their financial well-being.
One significant advantage of a novated lease is the tax benefits it can provide you and your employees. The purchase price and most running costs are paid from pre-tax income, significantly reducing tax payments compared to traditional car financing. On average, our research has found that this creates an annual savings of $5,188 versus conventional car financing.