What's included in a novated lease salary package?
A novated lease can cover your running costs as well as your car for some serious savings.
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One of the most exciting features of a novated lease is the opportunity to include all running costs with your car in one predictable regular payment – something not possible if you buy outright or use a standard car loan. You can salary sacrifice not only the repayments on the vehicle itself but also all running costs associated with the vehicle, including your fuel, servicing, tyres and roadside assistance.
Running costs
With a novated lease, you pay for these running costs and your car in pre-tax dollars, lowering your taxable income – a tax efficiency that can save you thousands. As an added bonus, you won’t pay GST on any of these items either (a further 10% saving).
Novated lease vs buying outright vs car loan
A comparison, including running costs
| Comparing a $60,000 car over 5 years: | Novated lease | vs | Ownership | vs | Car loan |
|---|---|---|---|---|---|
| Cost of car | $51,000 (with fleet pricing discount) |
$60,000 | $60,000 | ||
| Gross salary | $100,000 | $100,000 | $100,000 | ||
| Claimable purchase and running costs (pre-tax) | $5,640 | $0 | $0 | ||
| Taxable income | $94,360 | $100,000 | $100,000 | ||
| Income tax payable | $22,072 | $24,187 | $24,187 | ||
| Net income | $72,288 | $75,813 | $75,813 | ||
| Post tax loan and running costs | $9,600 | $17,568 | $20,652 | ||
| GST paid | $0 | $1,648 | $1,648 | ||
| After-tax cash available | $62,688 | $56,597 | $53,513 | ||
| After-tax cash available (over 5 years) | $313,440 | $282,985 | $267,565 | ||
| Residual (balloon) | $15,411 | $0 | $0 | ||
| After-tax cash available after payment of residual | $298,029 | $282,985 | $267,565 | ||
Cash lost as a result |
$15,044 |
$30,464 |
This example assumes the following:
Lease/loan term = 5 years
$60,000 vehicle purchase price (divided over 5 years at $12,000 per year for ownership calculations).
Novated lease company can obtain fleet pricing discounts, in this example we were able to achieve a 15% fleet pricing discount bringing the purchase price down to $51,000
$464 per month running costs (fuel, insurance, rego, servicing & maintenance, tyres, etc.) approximately 10,000 km per year.
Car loan interest rate 7.99%
Minimal business use
If you use your car for business, you can save a whole lot more. Contact us for a personalised quote.
Easy budgeting on a novated lease
As all vehicle costs are accounted for in a novated lease, budgeting is simple, and you won’t get bill shock when your rego or insurance costs arrive. At the start of your lease, we accurately budget the future running costs of your vehicle based on your needs and historical usage. This allows for an easy payment that’s the same amount every pay cycle throughout your lease. You can adjust the forecast however you’d like at the start, and if you have a surplus at the end of your lease, the funds are returned to you.
We provide you with a card to use when you buy fuel and a card to pay for all of your servicing costs – and these costs are simply deducted from your account, which means no money out of pocket.
On top of that, we provide you full support throughout your lease, so you can track all of your vehicle expenditure and keep full transparency of your vehicle usage.
Your fuel card can make budgeting (and paying) for fuel super convenient
Further savings on running costs
In addition to saving on tax and GST, you’ll also be eligible for:
fleet (wholesale) pricing on parts and labour
fuel discounts
When you get a novated lease through us, you’ll be registered to our fleet network, managed by our sister company, Novater. Novater is an innovative specialist in lease management, and through our network we are able to secure compelling discounts for you, on both your vehicle and running costs.
Novater closely manages your lease, processing any expenses, checking all charges on your account from third parties, ensuring your invoices are paid on time, and offering transparent account reporting that is near real time (as close as can be done). All of this makes your life much easier at tax time. Most novated lease providers outsource this critical aspect of lease account management, leading to frustration for clients and lack of clarity around account security.
It’s your choice
It’s up to you which running costs you’d like to include with your lease. Naturally, you can save more if you include more, given that you can pay from pre-tax income with a novated lease, but if you only want to include some (or none), you can.
See our plans for a better idea of your options, with pros and cons for three scenarios.
If you have any questions about running costs with a novated lease or want to go through your individual circumstances in more detail, give us a buzz on 1300 888 594 for an obligation free chat. Or you can request a callback if you prefer, or send us a message and we’ll message you back.