Organisations salary packaging with CBB can offer novated leasing to their staff through our Corporate Partner, StreetFleet. It’s just another benefit that employers can offer to enhance remuneration for prospective and existing staff, contributing to increased attraction and retention. Importantly, community organisations can leverage this to enrich the continuity of care provided to clients and customers. From the employee’s perspective, it’s like getting paid more without working longer hours; but there’s no cost to the employer.
Imagine sitting down with a new staff member to talk about what they can access through salary packaging. Can you see yourself telling them that not only can they access $15,899 tax free every year, but they can also save thousands of dollars on their next car?
Given the difference in salary made by staff in not for profits versus their counterparts in other sectors, what would this mean to the people who work hard to support our communities?
However, there’s a challenge: there are so many misconceptions about novated leasing – in fact, some employers have heard many of these and decide not to offer it. But today, we’re going to clear the air. Here are five common myths about novated leasing: busted!
#1 My organisation will have to make the lease payments
False! The payments are actually made direct from a mix of the employee’s pre-tax and post-tax income (to maximise tax savings), and not your organisation’s money. In fact, all costs associated with a novated lease are the responsibility of the employee, so it won’t cost your organisation a single cent.
#2 A novated lease is only worth offering to executive or management staff
This may have been the case once, but times have changed. A novated lease is ideal for any staff member who wants or needs a new car – only casual employees and employees still on probation may be ineligible. Plus, all applicants are subject to credit checks by the lender with lending limits equal to their annual income.
But I should also mention that a novated lease can include running costs – like fuel, registration, roadside assistance membership, new tyres, repairs, and maintenance. This means that your staff can save on these expenses, too – so it’s great for anybody who would benefit from saving on a range of car-related costs (i.e. everyone). Plus, novated leasing with StreetFleet unlocks fleet pricing on maintenance – perfect if you’re budget-savvy!
#3 It’s only worth offering to staff who drive for business purposes
Again, this was true once upon a time, but not anymore! Your staff members can package any car; it doesn’t matter if it’s a family car, weekend car, or even a car that’s fully decked out for 4WD adventures. They can even package multiple leases with their income, provided their income can cover them.
#4 The residual payment is not affordable for my employees
If your employee really loves the car and wants to keep it, they can pay out the residual in a lump sum or take out a new lease. It’s worth noting that, at the acquisition phase of each novated lease, StreetFleet helps your employee to choose a car that will hold its value. If they decide to sell, StreetFleet can leverage their networks to get them a great price. Most of the time, they’ll make enough to cover the residual value, and sometimes more.
#5 My organisation will have to deal with the car and repayments if the employee leaves
Not at all. If your employee has a novated lease, it is under their name and so, if they leave, the novation simply stops. As agreed from the outset of the lease, if they leave their job or their employment is terminated, they retain responsibility for the car and the repayments. Essentially, it just becomes a regular car loan without the involvement of the employer – and they will no longer have access to the same tax benefit.
So, did this change the way you see novated leasing?