Novated Leases

A Guide to
Novated Leases
www.sgfleet.com
Improve the
Weekly Budget
A holiday, new clothes or just a bit more money in the
wallet; whatever the reason, everyone should consider the
potential improvements a Novated Lease can make to any
weekly budget. It’s as easy as calling sgfleet and taking out
a Novated Lease on a motor vehicle. sgfleet may even
be able to buy a driver’s current vehicle and lease it back.
The information contained in this brochure will give a basic
introduction to an sgfleet Novated Lease.
What is a Novated Lease?
A Novated Lease is simply an
arrangement between an employee,
lifestyle and budget, from a sedan or
wagon, or even a 4WD or sports coupe.
their employer and sgfleet that will help a
In addition to purchasing a brand new
driver to save money on their next vehicle
vehicle, used vehicles can also be
purchase. A Novated Lease can allow
leased which includes sgfleet’s selection
a driver to save money on their personal
of quality ex-lease vehicles. The current
motor vehicle and operate it in a tax and
selection can be viewed at
cost-effective manner. This is called a
www.sgfleet.com.
salary packaging arrangement.
Because individual financial situations
There are many benefits to this style of
differ, sgfleet has designed a calculator,
arrangement, from potential income
available at www.sgfleet.com, in order to
tax savings, through to registration,
allow individuals to better understand the
insurance, fuel and maintenance all
savings that are available. Or alternatively,
being net of GST, plus access to sgfleet’s
one of the friendly Novated Sales
vehicle fleet discounts. Any vehicle can
Consultants at sgfleet can be contacted
be chosen that suits each individual’s
to discuss the best possible solution.
“...sgfleet has designed a calculator available at
www.sgfleet.com in order to allow individuals to
better understand the savings that are available.”
sgfleet is a global fleet management
company with over 25 years’ experience
and offers expert knowledge, great
savings and superior service on a full suite
of Fleet Management Services.
From a range of salary packaging options
Turn the weekly
budget from this...
NON-SALARY PACKAGING (weekly)
Net Income
$1,400.00
Mortgage / Rent
$500.00
Car Loan
$160.00
Food
$250.00
Bills
$150.00
Living
$220.00
Fuel
$50.00
Car Running Costs
Total Expenses
Balance
$100.00
$1,430.00
$-30.00
...into this!
SALARY PACKAGING (weekly)
Net Income
Mortgage / Rent
Car Loan
$1,200.00
$500.00
$0.00
Food
$250.00
Bills
$150.00
Living
$220.00
Fuel
$0.00
Car Running Costs
$0.00
Total Expenses
Balance
$1,120.00
$80.00
and Novated Leases for individuals to
corporate leases for fleets, sgfleet can
tailor a solution for every need.
What’s Included
in a Novated Lease?
Simplicity for the driver is the aim, so most vehicle related
expenses can be included in an sgfleet Novated Lease.
Optional inclusions
and their benefit:
market value or lease payout is paid,
Comprehensive Insurance
LeaseGuard
Comprehensive insurance can be
LeaseGuard provides cover to drive a
included in the monthly rental of a
Novated Lease vehicle with confidence
Novated Lease with premiums fixed for
and peace of mind. In the event of
the life of the lease. The financial benefit
involuntary termination or retrenchment,
is that insurance premiums are paid
LeaseGuard will cover monthly finance
from pre-tax salary, ensuring tax savings.
payments on the vehicle for a period
Another benefit of the specifically tailored
of unemployment (limits apply), whilst
comprehensive insurance offering is that
still allowing the vehicle to be driven.
in the event of total loss, the greater of
Contact sgfleet for more details.
ensuring no concern about potential
gap payments.
SALARY PACKAGING INCLUSIONS
One fixed payment in line with the payroll cycle, for the life of the lease
Vehicle purchase, including direct delivery and a full tank of fuel
Maintenance in line with the manufacturer’s log book*
Fuel card to purchase fuel for a nominated number of kilometres*
Replacement tyres included up to an agreed number or budget*
Registration and CTP costs included
Comprehensive Insurance
Roadside Assistance*
Optional payment protection in the case of illness or unemployment
Extensive range of vehicle accessories*
* Paid with pre-tax salary, net of GST
Extended Warranty
If a driver is considering keeping the
vehicle at lease expiry and wants the
benefits of an extended warranty
program, then an sgfleet consultant can
Benefits of
Novated Leases
be contacted to discuss including an
extended warranty program within the
A portion of the vehicle finance and
lease. Payments will be made from
tax-free dollars, so the financial benefit
will be received from day one. This
program is fully transferable and worth
considering even if the driver plans on
selling the vehicle at lease end.
Roadside Assistance
Financial
running costs are paid using pre-tax
dollars, potentially providing income
tax savings. Vehicles may be financed
net of GST and additional savings can
also be achieved through sgfleet’s
purchasing power.
The Roadside Assistance Service ensures
that drivers won’t be left stranded and
A Novated Lease gives the flexibility to
offers drivers immediate assistance in
choose almost any vehicle, new or used,
Flexibility
case of the unexpected. The Roadside
including an ex-lease vehicle from sgfleet.
Assistance Service will assist from a simple
The term of the lease can be chosen as
jump start to minor mechanical repairs
well as any extras to the vehicle, including
24/7, 365 days a year, anywhere in
window tinting and DVD players that are
Australia.
paid with pre-tax dollars.
Convenience
Convenience is everything, so sgfleet
have included an easy payment option
that is managed by sgfleet and the
employer, and includes the vehicle
running costs like maintenance, fuel,
insurance and registration. Hassle-free
budgeting can be enjoyed with the
costs known in advance, with the lease
payments fixed for the term of the
arrangement.
Case Studies
sgfleet understands that everyone’s financial and personal
situations are different and have provided these two case
studies to demonstrate the importance of sgfleet understanding
each person’s position before providing a firm quote. To find
out the potential savings available under a salary packaging
agreement, call sgfleet on 1800 743 262.
Case Study #1
Charlotte is the Operations Manager at a national organisation and earns $195,000
per annum before tax. Charlotte requires a large car and will travel 40,000 kilometres
per annum. She has selected a 4x4 valued at $56,000 on a 4-year lease term.
In the below example, Charlotte is over $175 per week or $36,000 over the 4 year term
better off under a salary packaging arrangement rather than purchasing the vehicle
outright with post-tax dollars.
Salary Packaging
Outright Purchase
Gross Salary
$195,000
$195,000
Less Salary Sacrifice
$15,530
$0
Taxable Income
$179,470
$195,000
Tax on Taxable Income
$57,940
$65,497
After Tax Contribution
$10,675
$27,758
Net Income
$110,855
$101,745
Weekly Net Income
$2,131.83
$1,956.63
Case Study #2
Daniel is a full-time worker, new to the workforce. He earns $45,000 per annum and
is looking to lease a vehicle with a drive away price of $14,420. He travels just over
20,000 kilometres per annum and is looking for a 4-year lease term.
In the below example, Daniel is over $59 per week or $12,000 over the 4 year term
better off under a salary packaging arrangement than purchasing the vehicle
outright with post-tax dollars.
Salary Packaging
Outright Purchase
Gross Salary
$45,000
$45,000
Less Salary Sacrifice
$6,708
$0
Taxable Income
$38,292
$45,000
Tax on Taxable Income
$4,248
$6,664
After Tax Contribution
$2,800
$10,179
Net Income
$31,244
$28,157
Weekly Net Income
$600.85
$541.48
The salary sacrifice amount and after tax contributions are approximate only and are calculated based on the cost of finance as at July 2015. Running costs included in the comparison are maintenance,
initial and annual registration, comprehensive insurance, roadside assistance, up to 4 replacement tyres and a monthly provision for fuel. Please also refer to the disclaimer on the back page.
Novated Lease
FAQs
Q. Is Novated Leasing for
everyone?
Novated Leases are beneficial for about
85% of people who drive a car. The three
variables which affect the savings that can
be gained from a Novated Lease are:
•Income
•The cost of the car
•How many kilometres per year
are driven
An sgfleet consultant can be contacted
sgfleet also has a selection of premium
ex-lease cars. These vehicles are of
excellent quality and in most cases, only
2 to 4 years old and have been regularly
serviced and maintained.
To see the selection of cars available
visit www.sgfleet.com.
Conditions do apply around the age,
type of vehicle and number of kilometres
on used vehicles. For more information
contact one of sgfleet’s consultants.
of how much can be saved under a
Q. Does the car need to be used
for business to save tax?
Novated Lease arrangement.
No, the vehicle does not need to be used
Q. Is there a limit on the type of
vehicle that can be Novated?
for business purposes to save tax under
One of the benefits of Novated Leasing
vehicles with mainly private usage.
to obtain a quote to gain a better idea
is that there are generally few restrictions
a Novated Lease arrangement. In fact,
generally Novated Leases are used for
on the type of cars that can be novated.
Q. What is Fringe Benefits Tax?
Novated Leases are typically used for
Fringe Benefit Tax (FBT) is a Federal
personal cars (as opposed to company
cars), so it is generally up to the employee
to choose their own car.
Vehicles over 1 tonne in payload carry
certain conditions and motorbikes
cannot be financed under a Novated
Lease agreement. In addition, some
employers may put restrictions on the
types of cars that can be purchased
under a Novated Lease.
Q. Can a Novated Lease be
obtained on a used car?
Yes. In addition to new vehicles,
Novated Leasing is available
for used vehicles, or even
a driver’s existing
vehicle.
Government tax imposed on employers
on the value of certain fringe benefits that
have been provided to employees
in respect of their employment. The
FBT year runs from 1 April to the following
31 March. sgfleet makes
FBT calculations simple with a range
of easy to use solutions
including online
calculators.
JULY 2015- JUNE 2016
Want to Know More?
sgfleet believe in the consultative approach and prefer to talk to you,
answer any questions you may have and ensure you totally understand
this Novated Lease solution.
For more information on Novated Leases and to find out exactly how much
can be saved, call one of the sgfleet Sales Consultants now on 1800 743 262.
1300 138 235
www.sgfleet.com
sgfleet does not purport to offer legal, financial or taxation advice. Employers and employees should seek independent advice as to the implications of a Novated Lease transaction. The salary packaging amounts and take home pay calculations
set out are estimates only. While due care is exercised by sgfleet to ensure integrity of the estimates it does not make any warranties, express or implied as to its accuracy or completeness. Note that the amount of any FBT actually paid by the
employer is not within the control of sgfleet and is dependent on a number of factors, including the characterisation by the employer of the type of benefit received by the employee and the actual level of usage by the employee of the motor
vehicle for both private and business purposes. Employees should ascertain from the employer how it intends calculating the amount of any FBT which it will pay in relation to the benefit provided in connection with the proposed lease. Based upon
that information, the amounts of the provisions set out in this brochure may need to be varied. Full terms and conditions are available on request.