As the credit crunch really starts to bite, increases in salary are few and far between and bouses seem to be a thing of the past, so employees need to make the best use of the dollars they get in their pay packets. Salary packaging with a novated lease is one option that delivers considerable benefits to both employees and employers.
Employers face a predicament in the current economic climate. No matter how much they might want to give their valued employees a pay rise, often the money just isn’t there. Therefore, employees are looking for a way to stretch their salaries further and employers are looking towards more efficient work practices to compensate their employees without any additional outlay. There is a solution that works for both – a novated lease.
Salary packaging with a novated lease continues to be one of the most powerful remuneration benefits an employer can offer in these difficult times and the beauty of it is that it rewards employees without any financial outlay from the business.
A novated lease allows the employee the opportunity to purchase a car using their pre-tax salary to pay for vehicle repayments and ongoing running and maintenance costs. With a novated lease arrangement the employer makes the monthly instalments directly to the financier out of the employee’s pre-tax salary. This means that not only is the employee’s taxable salary reduced, resulting in an increased take home pay, but the employee has the added benefit of not paying GST on their vehicle expenses, as they can take advantage of the employer’s tax status. Of course, one of the most attractive benefits of a novated lease is the convenience – all expenses associated with running a car are bundled together and packaged as part of the employee’s salary, so there are no nasty shocks at the end of the month.
Another attractive benefit is that companies offering novated lease products can help with the selection of a vehicle and can often use their buying power to get a better deal than the employee acting alone. Once the novated lease is in place, the fleet manager also deals with registration renewals, compulsory third party insurance and any infringements or accidents, keeping employees on the road with the minimum of fuss. Even if the employee should move jobs, the novated lease can be transferred to the new employer, giving peace of mind well into the future.
Employees are not the only ones who benefit; there are also many advantages for employers who offer this salary packaging service to their staff. They retain valued employees in the safe knowledge that they are content and feel valued. Employers don’t need to worry that a novated lease will bring an increased administrative burden, as the companies offering the novated lease will handle any problems that may arise. Fleetcare, for example, will deal with the entire novated lease process, from explaining the benefits direct to employees to offering 24-hour support on all aspects of the lease and vehicle operation, for piece of mind for both employee and employer alike.
Whatever the economic climate, a novated lease offers a win-win situation for both employee and employer.
Visit the Fleetcare website for more information on a Novated Lease or call a Fleetcare Consultant on 1300 655 170.
– Nigel Malcolm is the managing director for Fleetcare (www.fleetcare.com.au)
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