Your employer deducts a portion of your finance payments and vehicle running costs from your pre-tax salary, so you pay less tax and have more money to spend on payday.

Because a novated lease is a benefit provided by your employer, it attracts Fringe Benefits Tax (FBT). However, we split your deductions between your pre- and post-tax salary which offsets your FBT liability, so in most cases there’ll be no FBT to pay.

Here’s an example of how it works for John – an office worker who earns an annual gross salary of $85,000.

With a car loan, John purchases his car for the advertised cost, and makes his car loan payments and pays his running costs from his post-tax salary.

However, with a novated lease, he makes a payment to cover his car finance and all his running costs before he receives his salary. Part of this payment is deducted from his post-tax salary so that he doesn’t have to pay any Fringe Benefits Tax. The remaining amount comes from his pre-tax salary. Salary Solutions also uses its buying power to secure John a great price on his new car, and he pays no GST on the purchase price, instantly saving 10%. John’s employer passes on the GST savings on the finance payments and the running costs of his car, so John goes on saving throughout his lease.

John chooses a Toyota Camry Altise which costs $26,490 drive away.

With a Car Loan With a Novated Lease
John’s salary 85,000 John’s salary 85,000
Pre-tax payment Pre-tax payment 4,620
John’s taxable salary 85,000 John’s taxable salary 80,380
Tax and Medicare 20,872 Tax and Medicare 19,278
Salary after tax 64,128 Salary after tax 61,050
Johns car loan payment* 7,332 John’s after-tax payment 5,030
John’s running costs 4,553
Money available after car costs 52,243 Money available after car costs 56,020
Extra money with novated leasing per year 3,777

Assumptions:
*Car loan rate 10% (effective rate) pa, 5 year lease, NL rate 9.73% (effective rate) pa

John will receive over $3,777 extra a year with novated leasing!