The terms of a novated lease can be anywhere from one to five years.
Each payroll deduction reduces the balance of the lease using pre-tax salary. This provides significant tax benefits compared to simply financing the vehicle on your own.
Another big advantage of a novated lease is that all running costs including fuel, insurance, maintenance, and tyres are included in the same payroll deductions (depending on the lease type you choose).
Additional benefits include:
Note that novated leases include a residual value amount that must be paid to the financier at the end of the lease term.
The minimal residual value percentages are set in a scale by the Australian Taxation Office.
With a novated lease, you have a great deal of flexibility in your choice of vehicle.
However, there are some restrictions for the types of vehicles that can be leased, most notably:
A novated lease is available for used vehicles as well as new vehicles. However, certain restrictions apply on the minimum value to be financed and the vehicle’s age at the end of the lease.
All finance lease agreements depend on the lease terms.
Which option you choose depends on your financial situation. It is therefore in your best interests to seek professional advice before proceeding.
Obtaining a novated lease for your new vehicle purchase is much easier than you think. It involves the following steps:
If you would like a novated lease explained further or to discuss your circumstances with Ascent Accountants, please contact us on 08 6336 6200.
Alternatively, through our association with Fleet Network, you can contact them directly via the below details:
Paul Johnson on 0411 241 835 or paulj@fleetnetwork.com.au
Ryan Murphy on 0401 522 626 or ryanm@fleetnetwork.com.au