Novated leasing is a great way to get the tax benefits of a car lease without needing a separate ABN. If the employment is ceased for whatever reason, the novated lease contract also ceases and any financial obligations are then reverted to the emplyee. The responsibility of the lease falls with the employee, with lease payments deducted from the employee's pre-tax income (also known as salary packaging). Essentially, a novated lease is an agreement between the employee, employer and finance company where the employee enters into a car lease with the finance company, while the employer agrees to take on the payment obligations (which is included in the employee's salary). Employees who are keen to use a Novated Lease* as part of a salary packageĪ novated lease allows a business to lease a vehicle on behalf of their employee.Individuals who lease the vehicle to generate income.It depends, If you’re using a vehicle for work or business purposes more than 50% of the time, a car lease may be the right option for you. Read our article on whether to lease or buy a car for more information. You can make lease payments in advance, which can be handy at tax time.If you use the car for business there can be tax deductions that become available to you (check with your accountant), which can include claiming your monthly repayments based on the percentage of business usage, along with the ongoing running costs of the vehicle.You can apply a residual amount to the lease (see the above section) which reduces your monthly payments.
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