Employees are able to choose their own vehicle and salary package the vehicle lease payments and running costs – i.e.: convert their vehicle lease payments and running costs from after-tax expenses to predominantly/fully pre-tax expenses.
Consequently, employees significantly increase their take-home salary as tax is applied to their salary after the pre-tax expenses are deducted.
What is a ‘Novation’?
The responsibility for vehicle lease payments to the financier is transferred (novated) from the employee to the employer - through salary deductions direct from the employee (hence the term, ‘Salary-Packaging’). The vehicle then becomes an employer provided benefit as the employer enables the lease payments and running costs to be paid predominantly/fully from the employee’s pre-tax wage or salary.
At the end of the lease (or earlier if the employee chooses to) or upon termination of employment, the full responsibility for the lease payments reverts to the employee.
How Does it Work?
inNovated Leasing provides an employee/driver with the flexibility and convenience of apportioning their motor vehicle costs into fixed pay period deductions (monthly / bi-monthly / fortnightly / weekly), based upon the anticipated km’s to be travelled. Expected (but perhaps un-welcome) expenses like annual registration and insurance costs, servicing and tyre replacement are now dispensed with simply, being apportioned over time.
The actual vehicle expenditure is monitored to ensure the expenses reflect the anticipated usage. Where a significant variance between the anticipated and actual ’vehicle usage & expenditure’ occurs, then the apportioned expenses are adjusted to reflect the actual usage. All unspent funds are returned to the employee at lease end.
It Just Doesn’t Get Any Easier!