For those businesses that want to attract the best people, and provide a little extra to their staff, a novated lease offers benefits to both sides that often results in increased staff loyalty and better bottom line results. Many customers are put off by the complicated sounding name, but they shouldn’t be because it’s actually a lot easier than it sounds.
How It Works?
An employee leases a vehicle from a finance company, and the employer makes the payments on the lease agreement. As the employee holds the lease, all other obligations under it are the employee’s responsibility: service and maintenance, insurance, taxes, etc. Further, if the employee leaves the company, then all financial obligations revert to him/her.
It is common for the employer to make the lease payments from the employee’s pre-tax income, which means the employee pays less tax, and effectively receives a pay increase.
The Benefits to an Employee
In addition to an increased disposable income, the employee has the flexibility of choice of car. Whereas receiving a company car, as part of a salary package, is often restrictive as to make and model, under a novated lease scheme the employee makes all the choices. He, or she, can select the car that is best for his/ her lifestyle, and because it is the employee’s car, it can be insured for all personal uses.
If the employee does change employers, he/she is also able to keep the car. The employee can take up the payments himself/ herself, or the lease payments can be transferred to the new employer.
Finally, when selecting the car of his/ her choice, the employee may be able to save on goods and service tax (GST) at the time of setting up the lease.black bolts
The Benefits to an Employer
Novated lease agreements allow a business to increase employee benefits at little or no cost. The business does not have the expense of selecting and maintaining company cars – with insurance payments, the cost of servicing and maintenance, etc – nor does it have to enter into time costly arrangements with car dealers.
The employer is seen as more flexible to an employee’s needs, increasing the benefits that it gives its employees, and this in turn means greater staff retention. However, should the member of staff decide to move to pastures new, then the employer is left with no financial obligations, nor an unused car in its garage.
Novated Leases: Everyone Wins
Novated leases have great benefits for both employers and employees. Many employers are turning to novated leases as a great way of rewarding employees, or adding a little extra to a salary package and attract new talent, without the added costs that providing a company car entails. In fact, for many employers, novated leases actually add numbers to their bottom line results.
Remarkably in this day and age, there is finally a win/ win product, good for employer and employee alike.
To get the most out of the advantages and benefits of a novated lease, you should ensure this financing solution is right for you.