A novated lease is one of the easiest and most cost-effective ways for an employee to buy and own a car. It is a financial arrangement that allows an employee to package their car and running costs including insurance, maintenance and fuel and pay for it using their pre-tax salary.
This means the employee gets the benefit of a new car immediately and can pay for it and all the running costs through a regular payment deducted directly from their salary by their employer offering significant savings.
While the vehicle is owned by the employee, a novated lease can provide significant benefits for both employers and employees.
Benefits for Employers
- Neutral cost to employers - all costs are borne by the employee and are included in the lease payments and salary deductions taken by the employer.
- Outsourced administration - Prosperity Smart Drive will handle all employee queries and deal with any issues that may arise meaning you can focus on your business.
- Financial risk sits with the employee. As the employer, you won’t be stuck with the car if the employee leaves employment.
- Reduction in payroll tax and employee on costs.
- Improved employee retention and attraction by providing novated leasing as a benefit.
- Tax effective way of leasing and running a vehicle.
- Discounts available on services and purchase from partnering with Prosperity Smart Drive.
- No GST on the purchase or running costs of the vehicle.
- Build equity in the vehicle from pre-tax salary.
- Potential to make a tax-free profit on the sale of the lease at the end of the term.
- Choice of vehicle.
- Locked interest rate for the term of the lease.
- Set monthly costs allow for smooth budgeting by the employee.
Some businesses are selective about who can reap the significant benefits of a novated lease restricting the availability to senior managers. However, once the benefits of a novated lease are explained, businesses that are seeking to change their internal culture, find that adding novated leases to the range of benefits available to all employees can be a powerful tool for staff engagement.
For more information contact our National Employee Benefits Manager Mark Welsh on 02 4907 7222 or mwelsh@prosperity.com.au.