Purchasing a new car is an exciting experience. If you are considering financing your new car purchase via a novated lease agreement, there are a number of things to consider.

Benefits

• 3 year manufacturers warranty
• Can also receive an extended 2 year manufacturers warranty
• 1st owner, so no unknown history
• Title guaranteed by car dealer
• Receive a fleet discount for all new cars

Disadvantages

• All new cars depreciate over time but this is more noticeable over the first few years.
• Luxury car tax (LCT) is payable for all new cars over $57,180.00. This is an additional 25%
• Must service the new car for all scheduled servicing otherwise manufacturers warranty could be voided

Taxation Implications

Where the amount financed is below the Depreciation Limit ($57,180), the employer claims the novated lease payment as a business expense. Above the Depreciation Limit, they claim the interest charges and depreciation up to the value of the Depreciation Limit ($57,180).

The amount financed is the purchase price of the new vehicle minus GST.

GST is also charged on the residual value on the lease, and as the Novation reverts back to the employee at the end of the lease, the employee is responsible for paying the GST on the residual.

GST is charged on the monthly novated lease payment and as long as the employer is registered for GST, they can claim this back on their BAS.

Want to find out more?

Complete The Aussie Chief's friendly enquiry form and we'll get an experienced novated lease consultant to call you within a few hours. What could be easier?