>> novated lease
Novated Lease is a form of “salary packaging” . A
allows an employee to lease a motor vehicle while their employer agrees to
take on the employee's obligations under the lease, paying the monthly lease
rentals from the employee's pre-tax income ("salary sacrificing" this income).
This is a tax effective way of acquiring a motor vehicle, popular with salaried employees.
If employment ceases for any reason during the lease period, or the lease agreement is finalised, the Novation ceases and the obligations assumed by the employer revert back to the employee.
Why consider a Novated Lease?
Residual value on the novated Lease is also subject to GST. Given that the novation reverts back to employee ownership at the end of the lease, the employee is responsible for paying the GST on the residual.
You will also be charged GST as part of your monthly Novated Leasing payment. If your employer is GST registered, they can claim the GST paid back on their BAS.
Fringe Benefits Tax (FBT) is payable on the motor vehicle, and this expense is normally passed on to the employee. The amount of FBT depends on the kilometres you travelled each year or amount of business use. The higher the kilometres and business use, the lower the FBT.
Where the amount of the lease is below the Depreciation Limit, the employer
is entitled to claim the Novated Leasing payment as a business expense. Above
the Depreciation Limit, they claim the interest charges and depreciation up to
the value of the Depreciation Limit