Novated Leases and beating tax bracket creep
If you’ve been working in the same job for quite some time and a promotion or pay rise is just around the corner, then you’re probably looking forward to some extra money in your pocket, right?
But that sweet little pay rise might turn a little bitter if it pushes you into the next tax bracket, increasing the government’s tax take and leaving your pay packet a little thinner than you had expected. Salary increases can also potentially impact other benefits (eg. private health insurance rebate, family tax benefit, child care benefit).
You can at least console yourself that you’re not alone. Inflation and so called “bracket creep” is combining to push a lot of Australians into the next tax bracket, dampening the joy of an expected pay rise for millions.
In fact by 2025 some 43 per cent of taxpayers are expected to be in the top two tax brackets - that’s quite an increase on the 27 per cent in 2015.
That prospect probably sounds a bit depressing, but take heart, because the good news is that there is something you can do. In fact there’s an easy way to keep more of your hard-earned pay to yourself. Best of all, you can get behind the wheel of that new car you’ve always wanted at the same time.
Salary sacrificing is the key
The key is salary sacrificing, this is where you give up (or “sacrifice”) a little of your pre-tax income and take that pay rise in the form of a non-cash benefit instead. By doing that you may be able to push your taxable income back down to the tax bracket you just left.
A novated lease on a new car is the ideal way to take that non-cash benefit. Not only do you get the pleasure of driving a brand new car, you save money on the cost of running it. A Fleetcare novated lease will package up the finance, fuel, insurance, registration, maintenance and roadside assistance costs.
Easy as one; two; three
Sound complicated? It’s not! In fact it’s really as easy as one; two; three:
Choose your vehicle.
Fleetcare will arrange the discounts on the purchase and running costs of it.
Your employer takes those costs from your salary, leaving you with impressive savings on the total cost of your new car and more money in your bank account.
Need to know more? Call Fleetcare today on 1300 777 600 for a chat about the tax-saving benefits of novated leasing.
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