Uncovering Novated Lease Myths
Novated leases have been in existence in Australia for more than three decades; therefore, don’t be deceived that it is a new idea. Novated lease is a perfect idea of saving some dollars and managing your vehicle via your salary by making use of pre-tax dollars. However, there are a lot of myths out there about novated lease schemes, their eligibility, and the benefits that a person can enjoy.
Novated leases are complicated
Don’t be deceived to believe that novated lease products are involving. In reality, it is a package that allows you to buy a car at an affordable rate, and you get the model that you desire. Besides, it packages your vehicle and associated expenses via your salary using pre-tax dollars. Novated lease involves three parties, which are the financing company, an employee and the employer. The financing firm usually manages the communication, all the set-up, and in-lease management, which also entails employee management, FBT management, and reporting and reconciliations between a broker such as as Stratton Finance https://www.strattonfinance.com.au/ as well as your employers. Your employer just needs to deduct the required amount of money and pay invoices monthly.
You don’t earn enough salary
Novated lease in Australia can be used or accessed by everyday employees such as government employees, nurses, tradespeople, bankers, and accountants among other professionals. Unfortunately, many people have been made to believe that the high-end employees can only use it in the country. In reality, novated lease aims at helping the average employee in Australia. Employees are required to get the car model that they want and a well-thought budget to take care of the operating expense of running the car. However, it is advisable to seek financial advice from a financial expert before you proceed to get novated leases.
People lose their benefits when they change jobs
The car and novated lease go with you even when you leave your post. The firm stops paying the monthly payments so that your contract is transferred to your new employer. Your current employer will not be tied to your vehicle finance lease.
It is only for people who drive to work
Surprisingly, a novated lease is designed using statutory fringe benefits tax calculation. You can use a novated lease calculator to know your monthly payments by giving information of the kind of car you want. Novated lease doesn’t have restrictions for any business-use kilometers. Additionally, you can package a vehicle on behalf of another person like your wife or husband through your salary.
Novated leases are only available for employees in large firms
Many people have a myth that novated contracts are only available to staff members working in large companies. On the contrary, the salary packaging benefit is open to any company in Australia that wants its employees to benefit from it. However, most companies operating the program in Australia have more than 100 employees because, in the past, small businesses were avoiding novated leasing because of the myth that it was a complicated program to set up and manage. However, small companies, even those with one employee can access novated leases.
Before taking up the lease, ensure that you know the compensation rate by quickly visiting Stratton Finance https://www.strattonfinance.com.au/novated-lease . Also, ask about the amount financed and the extras included in the quote. A financial expert can help you with the process.