You know the moment in traffic when you turn your head and get a pang of regret. The car in the next lane is bigger, louder, a perfect combination of beauty and beast. But the bank only had so much to loan you, right? If it’s time for an upgrade, a novated lease could be the way to get the machine you really want without stretching your budget (and having to eat canned beans for the rest of the year).
A novated lease is a salary packaging arrangement. This saves you coin by paying for a new car and all of the associated running costs out of a combination of pre-tax and post-tax salary. This means more cash in your pocket, with the benefits of regular servicing, maintenance, rego, insurances and replacement tyre costs spread across the lease term.
With the ADF’s 2 percent increase in remuneration from November 2017 only just keeping just ahead of the inflation rate of 1.9 percent (predicted to be 2.1 percent before year’s end), any way to keep your costs down is a bonus. But, there are a few things you need to know about novated leasing before deciding if it’s right for your situation.
Pay less tax
Under the agreement, the ADF makes the payments for the car and all its running costs directly from your payroll. For the majority of people, this will significantly reduce their taxable income.
Get the car you want, fully kitted
You’re not restricted to some beige sedan. If you’re looking at something beastly to punish over off-road trails or even in competitions, you’ll also be able to afford the extras like quality bullbar, tow rack, snorkel and winch, by spreading the cost across the lease period.
Not available for the Hawkei… yet.
Get a fuel card
One of the major perks of a novated lease, apart from the tax benefits, is you can organise your car related expenses in at once. Not having to fork out the funds for everyday costs can take a lot of financial pressure off. In situations when you’re away or deployed, it’s a comfort to know that it’s being looked after, including automatic registration renewal.
No Minimum Kilometre Requirements
So, it used to be the case that to benefit from novated leasing you’d have to drive a minimum number of kilometres each year. Road trip to Broome, anyone? Now, regardless of whether you drive 10,000 km or 60,000 km, the flat 20% Fringe Benefits Tax liability rate remains. Fewer kilometre could even mean a positive impact when you come to trade your car in at the end of your lease.
ADF members save more
The cost of a car always ends up being more than the sticker price, so get smart about purchasing your vehicle to avoid drowning in debt. Being a Government employee means getting special rates on novated leasing, which can be arranged directly through a leasing company like Easifleet, who will connect with your payroll officer and organise the paperwork.
Now, it’s time to binge watch every season of Top Gear and work out which car it’s going to be.
Written by: Scott Iriks, General Manager and Director at Easifleet, providers of fleet-management and novated-leasing services to a broad range of customers in both government and private sector.
Disclaimer: please consult your financial advisor and read terms and conditions before deciding whether leasing is right for you.