To help you weigh up your options, we’ve put together a list of questions that our experts are often asked about novated leasing. If you want to know more, the best thing to do is pick up the phone – one of our friendly advisers would be delighted to talk you through the details.
1. How do I know if I’m eligible for a novated lease?
If you’ve completed your probation period at work and your employer is happy to enter into the agreement with us, you’re eligible. There’s a page for employers on this website if you want to pass it on, or simply ask your employer to give us a call on 1300 777 600.
2. Can I only take out a novated lease agreement through my employer?
Yes. It’s a salary sacrifice arrangement, so your employer must be involved.
3. Do I have to buy a new vehicle to enter into a Novated Lease agreement?
No. As long as your vehicle is less than 7 years old by the end of the lease, we're happy for you to choose a second hand vehicle. We'll even help you source one that matches your specification. Luxury vehicles do have a specific age criteria though, so depending on what you're after, it's worth checking with your Novated Lease consultant.
4. I have a trade in vehicle. Can it come off the purchase price?
With Fleetcare, you can trade in a vehicle as part of the process for your Novated Lease, however the trade in funds cannot be used to reduce the lease principle.
5. Can I choose the insurance company? I might be able to get a better deal elsewhere.
Yes. We always try to find a competitive insurance quote on your behalf, but it is possible to source your own insurance. Just bear in mind it would be subject to Fleetcare’s approval.
6. Can I set my vehicle residual lower than recommended?
The vehicle residual must sit within the minumum and maximum in term of the ATO guidelines. Refer to the chart below.
7. What happens at the end of my Novated Lease?
When you come to the end of your lease you effectively have three options:
Purchase the vehicle outright by paying off the residual value
Extend the lease and refinance the residual value
Start a new lease by trading in your vehicle or selling it privately
Unfortunately, if you end your lease early, you will incur additional administration costs and financial penalties, which will be stated in your finance documentation. But if you’re leaving your employer, we can always transfer the lease to another employer or set up a straight finance loan. It’s also worth knowing that we offer lease protection insurance, which covers your finance expenses up to three months after losing your job.
8. How does Fringe Benefit Tax (FBT) work?
Motor vehicle Fringe Benefits Tax (FBT) applies where a vehicle is supplied by an employer to an employee or their associate and is available for private use.
As the employer provides the fringe benefit, they are liable for the FBT payable, however under salary sacrifice arrangements, where the employer should be no worse off than if they had offered remuneration in the form of straight salary, the employer generally charges the FBT payable to the employee’s salary package post-tax.
You can also make post tax, GST inclusive employee contributions which reduce the taxable value and in some cases, can result in no FBT being payable at the end of the FBT year. The taxable value of the fringe benefit is calculated using either the statutory fraction or operating method.
Fleetcare's FBT service provides a calculation under each method and identifies the most cost effective method. You should always consult with a tax professional to ensure the best outcome for your personal circumstances.
9. What does the life of a Novated Lease look like?
There are three main stages in the life of your Novated Lease.
1. The first stage is calling Fleetcare on 1300 777 600 so the friendly staff can discuss your needs (such as your vehicle choice, kilometres per year and your lease length).
2. The next step after you take out your Novated Lease is managing your lease, which couldn't be easier with Fleetcare and the Fleetcare novated portal. The novated portal lets you manage your account and vehicle on your computer or mobile device. Fleetcare also have a 24/7 driver support hotline.
3. When it comes to the end of your lease you can start a new lease by trading in your vehicle or selling it privately, extend the lease and refinance the residual value, purchase the vehicle outright by paying off the residual value, or you could hand the vehicle back to Fleetcare.
10. How much can I save on a Novated Lease compared to a car loan?
A Novated Lease is more helpful than a car loan for one reason - tax savings. A portion of Novated Lease running costs are taken from your gross salary before tax and before the Medicare levy, this makes a big difference. We also have a Novated Lease calculator that gives you a customised break down of your expenses and savings to help you find out whether salary sacrificing a car will leave you with more money in your pocket. You can calculate your savings here.