How Is A Novated Lease Viable Option For You?

The novated lease is commonly perceived as complicated, which is why lots of people presume that it is not for them. This could also be because people assume it to be a program for high-income people with questionable tax breaks and require you to drive a great deal of miles yearly. This is, however, far from the truth. If you take the time to look closely, you'll soon see that if this benefit is offered by your employer, it's one of the most enticing automotive buying options. 

Here are a few benefits that novated car lease provides and how it can help you in the coming year.

1. You pay less tax 

Death and tax are the two most certain things in life but any strategy for paying the least amount of income tax possible will never go out of style. This is actually why novated leases are so beneficial — they're both cost- and tax-effective, so more of your hard-earned post-tax income is yours to spend.

A novated vehicle lease is considered the last good tax break for workers. Under the agreement, the employer makes the vehicle payments and all regular maintenance expenses from the employee’s paycheck, drastically reducing the employee’s taxable income at no cost to the employer.

2. There is no need for minimum kilometres

Another myth associated with novated car leasing is that you must drive a certain number of kilometres each year. This used to be the case but the situation has since changed due to the 2011 amendments to the law. The FBT, better known as Fringe Benefits Tax is not influenced by the number of kilometres driven in the FBT year.

Regardless of how many miles you drive, the flat rate of 20% FBT liability rate remains the same. Driving fewer kilometres in your car may have a positive impact when you trade it in once your lease expires.

3. You get a fuel card

A novated lease agreement also provides the perks of a fuel card. Another reason why this is beneficial is that, besides the amazing tax benefits, it allows you to organise all your car-related expenses at once, in an easy manner.

Knowing in advance that novated leases have these additional expenses like fuel taken care of takes financial pressure off and leaves a sense of reassurance. Another benefit that comes with having a fuel card is that you can keep a tab on your fuel usage. It reduces spending, saves money and is useful for both employers and employees

4. Low wage growth

In the past year, the growth rate of wages in Australia has slowed. Cars are expensive, but they are a need for our everyday lives. In uncertain economic times, obtaining funds for a car can be difficult. Even a car loan can be a high-risk expenditure. In such times, a fully maintained novated lease is the perfect solution. There is virtually no deposit required, and significant discounts on the purchase price make it a viable option for low-income earners or anyone else waiting for a boost in their pretax income.

With over three decades of experience, Finance Brokers Victoria will ensure you get the best business car solutions. To know more about novated lease and whether you should go for one in 2023, call us at 0482 078 000 or drop a mail at gary@fbvic.com.au. 

Also Read: Top 5 Ways To Finance A New Car