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Packaging
your car
The second instalment on how to make
make the most of salary packaging
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One
of the most commonly packaged benefits is a vehicle through
a Novated Lease
Photo by Cpl Cameron Jamieson, Army newspaper
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By
Maria Cavallo, SmartSalary
Novated Lease is one of the most commonly packaged ADO benefits used
by almost 3500 members.
Under a Novated Lease agreement you can lease a vehicle for an agreed
period of time ranging from one to five years. The vehicle is for
private use and can be new or used, depending on the conditions set
by each Novated Lease financier.
The ADO has established an approved panel of Novated Lease financiers
to provide you with a choice of companies with extensive experience
in salary packaging car benefits, however, note that each approved
financier has varying conditions under which they will offer finance
and/or vehicles. As with any major purchase, the ADO recommends that
you compare services offered by more than one provider before proceeding.
A list of current approved Novated Lease providers is available from
the Novated Lease Benefit Profile and/or the Salary Packaging Handbook
that have been created with SmartSalary, the ADO’s salary packaging
administrator. The profile and handbook are located on the SmartSalary
web site www.smartsalary.com.au.
Once on the web site, you can access the area for ADO members by entering
the employer code: ADO.
Why is packaging a vehicle through a Novated Lease advantageous? Packaging
a vehicle through a Novated Lease can potentially increase your effective
take-home pay by up to a few thousand dollars. This is because all
payments (lease, fuel and oil, maintenance, registration, insurance
and CTP insurance, road service membership, car wash and stamp duty)
are classed as FBT exempt and can be paid from pre-tax dollars. Furthermore,
any GST associated with these is paid for you by the ADO.
It is important to note that a Novated Lease is subject to an additional
Fringe Benefits Tax (FBT), which you are liable to pay. The amount
of FBT payable is dependent on the distance travelled each FBT year
and the price you pay for the car.
Ultimately the more you drive, the lower the amount of tax you will
have to pay. FBT payable is calculated on a concessional formula and,
based on your driving pattern, may be far more beneficial than financing
the vehicle outside of your salary package. Further, it is possible
to reduce your FBT Liability to zero by paying a portion of running
costs from “after tax” salary.
Salary packaging a vehicle through a Novated Lease is optional and,
though it may provide you with attractive remuneration, your personal
circumstances will determine how it affects you individually. The
ADO recommends that you first talk with your accountant or financial
advisor before entering into a Novated Lease agreement.
A list of ADO approved financial advisers can also be found in the
Salary Packaging Handbook located on the SmartSalary web site. These
independent financial advisors are familiar with salary packaging
and can help you to understand whether packaging a vehicle through
a Novated Lease will be advantageous to you.
For further information contact the SmartSalary Customer Service Centre
at ado@smartsalary.com.au
or 1800 632 496, between 8.30am and 5.30pm, Monday to Friday. |
