What’s included in a novated lease?
A fully maintained novated lease includes all vehicle related expenses such as; fuel, registration renewals, insurance renewals, maintenance and repairs, car washes, lubricants, tyres and road side assistance. Novated leases do not however include toll charges, infringements or car parking expenses.
Can I salary package a used car?
Yes, you can salary package used vehicles as long as your employer’s policy allows you to do so. This may also include an opportunity to salary package a vehicle that you may already own (known as a sale-and-leaseback).
Can I salary sacrifice more than one car?
Yes, you can salary package more than one vehicle as long as your employer’s policy allows you to do so and you earn sufficient income to salary sacrifice multiple vehicles.
What if my mechanic does not accept your fuel card?
Enlist provide a card that can be used to purchase fuel, lubricants, services, repairs, tyres and car washes at more than 11,000 merchants nationally. Most petrol stations, car dealerships and reputable merchants accept our fuel and maintenance card. If however you choose a merchant who does not accept our card then you can simply pay the bill and claim a reimbursement for the expense from Enlist. We process all reimbursement claims within five working days so you will have the money back before you know it.
What happens if I sacrifice more (or less) than I actually spend for my fuel and other running costs?
All cost variations between budgeted salary sacrifice deductions and actual expenses are reconciled back to you in full at lease end or employment termination, whichever is first. The shortfall or surplus of the final balance will be processed through your salary.
What is Fringe Benefits Tax (FBT)?
FBT is a corporate tax levied on an employer when the employer provides certain, non cash benefits instead of cash salary. A motor vehicle is one such benefit. By salary packaging your vehicle, you are effectively using pre tax dollars to pay for it, thereby reducing your taxable salary and as result, reducing the PAYG income tax applicable to you.
With the reduction of income tax, the Australian Tax Office (ATO) look to recoup some of this via another levy – FBT. The FBT amount is calculated on the basis of the car purchase price and the annual distance traveled in a given FBT year. In most cases, the savings gained from income tax reduction will be greater than the FBT payable and hence salary packaging a car becomes very tax effective.
To help save even more money, the ATO allow you to make post tax contributions (PTC), also known as recipient contributions, to offset against the deemed benefit value of FBT. The added benefit here means for those not on the highest marginally tax rate, are able to substitute the FBT rate of tax (46.5%) with a lower level of income tax. Overall outcome results in greater tax savings and more disposable income. We will show you the required split between pre tax deductions and post tax contributions to help you maximise all available benefits.
To learn more about FBT click here.
What happens if I fail to meet my target kilometres?
At the end of each FBT year (31 March) you will be required to submit an odometer declaration stating your final odometer reading as at the end of March. An adjustment will be made to either recover any FBT shortfalls or reimburse excess FBT deductions back to you. FBT shortfalls are normally recovered from your pre tax salary and FBT reimbursements are refunded as taxable salary.
Please note that if you have used post tax contributions to offset FBT then there is no FBT to be reimbursed.
Does the vehicle have to be used for business purposes?
No, in fact it is most beneficial when the vehicle is used primarily for private purposes. If you use your vehicle for a mix of business and private purposes, we encourage you to contact us to discuss your options and obtain a tax benefit analysis.
What happens if my employment finishes?
Please contact us immediately. Your novated lease will cease and your novated lease account balance will be reconciled back to you in full. We will guide you and help you ensure the termination process is smooth and painless.
In the event of employment termination you have one of three options:
1) Pay out the lease from personal savings or proceeds of sale (if vehicle is to be sold);
2) Transfer lease to a new employer. This option is subject to policy conditions of new employer; or
3) Continue to pay lease rentals and running costs from personal savings.
What is the residual value?
The residual value is the amount owing on the lease contract at the end of the term and will appear on the contract inclusive of GST. It is the responsibility of the individual who signed the lease to either pay out this amount or refinance for a further term. The vehicle cannot be handed back to the financier under a Novated lease arrangement.
What happens at the end of the lease?
There are three options available at the completion of the lease:
1. Trade / sell the car privately and start a new agreement on a new vehicle. If you sell the car for more than the residual payout, then the surplus is yours. Similarly, if there is a shortfall between what you owe and what you receive, you must contribute this amount
2. Re-finance the residual for a further term under the Novated arrangement
3. Pay the residual owing to the financier and own it outright. If you choose this option, you cannot continue to have it in the Novated fleet managed program, as it needs to be under lease. Therefore running costs etc will need to be paid directly by you from after tax dollars
Are there any other benefits other than tax savings?
Absolutely. One of the most often talked about benefits acknowledged by drivers is the pure convenience of having their vehicle managed by Enlist. A combination of regular deductions from salary each pay cycle, a fuel card for expenses, deductions that allow for registration and insurance expenses as they fall due, monthly reporting to ascertain the status of account balances, all amount to a stress free method of owning and running your vehicle.
What is an Associate Lease?
An Associate Lease is a rental agreement between an employee’s “Associate” (most commonly a spouse) and the employer. The parties agree for the employer to rent a vehicle from the Associate for an agreed amount and period.
Once the vehicle is leased by the employer from the Associate, the employer will normally deduct the lease rentals, running cost provisions and FBT from the employee in exactly the same way as a novated lease.
This type of arrangement allows employees to shift some of their pre tax salary to an Associate who is normally taxed at a lower income tax rate. This results in tax savings and ultimately reduces the cost of vehicle ownership.
Associate Leases are most commonly favoured by employees who wish to salary package a family vehicle which is either too old to re-finance or when employees have no other personal debts that can be restructured more tax effectively.