There are several ways to buy a car, the most common being – financing (car loan or home loan re-draw) or using your savings (cash). Financing is convenient and is designed to make buying a car easy. It’s also comforting to do what everyone else does. With a lot of other people doing it, how can you be wrong?
There is however another way, in fact it is the only way actually designed to benefit you. Rather than paying for your car entirely yourself, the government will share the cost of your car provided you pay for your car in a particular way. It’s called a ‘Novated Lease’.
For most people, a car is the second highest expense and ongoing expense in their lives, after their housing expense, so sharing the cost can amount to many thousands in savings.
Why Does Novated Leasing (Salary Packaging your Car) Exist?
It goes back to the 80’s. Governments only make money as money circulates. With interest rates at 17%, inflation as almost 12%, wage rises virtually non-existent, very tight economic conditions and general uncertainty with jobs, most people were not spending what little money they had.
Something had to be done to assist in stimulating economic activity. Paul Keating as Treasurer came up with a way to assist employers to provide pay rises that weren’t inflationary. There are two ways to increase take-home salary
(1) An up-front pay rise (but this adds to inflation), OR
(2) Deducting less tax (this doesn’t add to inflation).
This is why salary packaging exists and how not only you, but the government also benefits.
Paying for your car entirely yourself really doesn’t make sense, now that you can share your car costs.
Same car, same expenses, but now you only pay for part of the costs. How good is that!
How does it work?
Your car expense usually has the greatest benefit as it has the greatest ongoing costs, so deducting a good portion (if not all) of your car expenses from your pre-tax salary can amount to many thousands in savings.
It works like this:
(1) A Budget is Determined
- We work out how much you are likely the spend on your car over time and apportion the total costs into even salary deductions. So, if you are paid fortnightly, the total annual car cost is divided by 26. So now, instead of having lots of individual variable expenses over the year, you now have a fixed fortnightly deduction. Simple.
- No more finding the money to pay for the big bills and working out how much to keep aside for everyday ongoing car expenses!
(2) Salary Deduction is Setup.
- Depending upon your employer and individual circumstance, your car expenses are set up to be deducted pre-tax (either entirely or a good portion)
(3) Reduced Tax
- As your pre-tax salary is deducted for your car expense, tax is then calculated on the remaining salary (which is how/why you pay less tax). For many, the GST portion of the pre-tax expenses aren’t paid either – saving you even more!
(4) Other BIG Savings & Benefits
Lower Purchase Price – Fleet Discounts:
We negotiate for you as we are buying cars all the time. We provide you access to discounts usually reserved for businesses with large fleets.
- (You may be a great negotiator, but you are buying 1 car. We are buying cars all the time and know which dealers can deliver your car sooner and provide better pricing).
- We negotiate for you as we are buying cars all the time. We provide you access to discounts usually reserved for businesses with large fleets.
Lower Purchase Price – GST Saving:
- You don’t pay the GST portion of the purchase price when you buy from a dealer
What We Do – Our Mission
We help people, just like you, get into a car for a lot less than they can on their own. We also help you save thousands every year, by paying for everyday running expenses like fuel, servicing, tyres, etc…from your pre-tax salary.
We do this so you can have more money to spend on other things now or to put away for the future.
We can help you do this with a new car, used car or even your existing car. (That’s right, you don’t have to replace your current car to do this *)
* Conditions apply
Why Innovated Leasing Exists
For Employees (You)
We help you and others just like you to reduce the big costs associated with owning a car. The money that is freed up, usually thousands, can be put to other uses like immediate expenses (everyday bills, reducing mortgage payments), upcoming expenses (holidays/renovations) or your future (superannuation/investments)
Either way, whatever your preference, we help you free up money that would otherwise be unavailable to you.
We help employers attract and retain good quality staff by providing a benefit that is applicable to all employees, helping each feel valued by their workplace – an inclusive benefit, strengthening the workplace culture.
We do this by assisting employees to increase their disposable income at no cost to the employer with novated leasing. Importantly, no / limited ongoing administration is needed as we deal directly with each employee. (As a nice side benefit, employers actually have reduced payroll tax and workers compensation costs as well)
Providing a benefit that isn’t well understood, appreciated or even remembered by employees will diminish the value of the benefit. Our educational approach ensures employees recognise the value of their place of work.
Our focus is to help our clients succeed – both employers and their employees.