Novated Motor Vehicle Leasing Employer Information Booklet CBB

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Novated Motor Vehicle Leasing Employer Information Booklet CBB Powered By Docstoc
					Novated Motor Vehicle Leasing
   Employer Information

                       102 Woodville Road 
                       Woodville  SA  5011 
                        Ph     1300 763 505 
                       Fax (08)  8244 9145 

              Community Business Bureau
The following information is intended to provide broad guidelines only. Please note that the CBB is not
providing financial or taxation advice either directly or indirectly to any employee or associate of any

The CBB will administer Salary Packaging under their understanding of current taxation and other

This publication has been prepared without consideration of the particular investment objectives or
financial situation of employees (also referred to in this booklet as “employee”, as appropriate). In all
cases, employees should conduct their own investigation and analysis of the information contained in
this publication. No employee should act on the basis of any matter contained in this publication
without obtaining, considering and taking appropriate independent legal, financial or other professional
advice in respect of the employee’s own particular and personal circumstances. It is strongly
recommended that each employee who wishes to take advantage of Salary Packaging seek
appropriate independent legal, financial or other professional advice regarding entry into Salary
Packaging and their Salary Packaging arrangement.

This disclaimer does not limit or alter those statutory rights, which cannot be abrogated.
                                                Last updated January 2008

                   TABLE OF CONTENTS

Welcome                                                                  4
     •   Introducing CBB
     •   Introducing Street Fleet

Why Outsource                                                            5

Novated Motor Vehicle Leasing                                            6
     •   What is a Novated Motor Vehicle Lease?
     •   What are the benefits of having a Novated Motor Vehicle Lease

How does it work                                                         7
    •    The Process
    •    Employee Responsibilities
    •    Employer Responsibilities
    •    CBB Responsibilities

The Service                                                              9
     •   The Service
     •   Fee for Service
     •   Our commitment to you
     •   Our commitment to your employees

Attachments                                                              10
      •  Employer Report
      •  Employee Declaration Form
      •  Motorcharge Statement

Typical Example                                                          14


It is with great pleasure that we present our Novated Motor Vehicle Leasing Employer
Information Booklet which outlines our Novated Motor Vehicle Leasing Service on offer to
your organisation.

The Community Business Bureau was established in 1995 as a self funded, not for profit
community based organisation. The Community Business Bureau has gained a reputation
for providing a range of quality services which are community focussed, innovative and
affordable to the community sector.

The CBB is a unique organisation which;

    •   is a not-for-profit
    •   is committed to social objectives
    •   is a specialist in the community sector
    •   has a strong focus on customer service
    •   is committed to investing in ”continuous improvement” - product development and
    •   seeks a genuine and long term relationship with our clients based upon shared
        values of respect, trust and integrity.

For more information about the CBB and our complete services that we offer the community
sector please visit our website:


Street Fleet Pty Ltd is a South Australian based vehicle Fleet Management Company that has
grown from specialising in the Government and Not-for Profit sector to comprise all facets of
motor vehicle leasing and business finance for small and medium enterprises. They pride
themselves on their extensive experience in the motor vehicle and finance industries and
their ongoing commitment to provide outstanding customer service.
They operate autonomously of any motor vehicle dealer, manufacturer or financier,
enabling them to impartially negotiate and manage your finance and motor vehicle
requirements so as to offer a diverse range of products and services to suit your

For more information about Street Fleet please visit their website:

4                            CBB Novated Motor Vehicle Leasing Employer Booklet 
Why Outsource

In today’s business environment many organisations use specialists to assist their
organisation to be efficient and cost effective.

Keeping this philosophy in mind, by outsourcing your Motor Vehicle Novated Leasing
requirements to the CBB, it will:

    •   provide your employees with greater salary packaging flexibility

    •   assist employees maximise their various taxation savings

    •   reduce your costs associated with administration

    •   give you access to experts such as Street Fleet with over 25 years experience in motor
        vehicle purchasing and financing

    •   allow you to focus on your core business

In addition to these benefits the:

    •   CBB and Street Fleet guarantee confidentiality of employee information

    •   CBB provides all the necessary reports to assist with your FBT and GST reporting

5                             CBB Novated Motor Vehicle Leasing Employer Booklet 
Novated Motor Vehicle Leasing

What is a Novated Motor Vehicle Lease?
This is the purchase of a motor vehicle by the employee specifically leased by a financier. It is
a three way agreement between the employer, employee and the financier whereby the
employer agrees to deduct the lease payments from the employee’s gross salary. The
arrangement involves the following:

    •   The employee chooses the type of car, colour, options etc

    •   The employee leases the vehicle from Street Fleet

    •   The car is registered in the name of the employee

    •   If the employee ceases employment the novation also ceases. The employee will be
        responsible for the remaining lease payments on a monthly basis

    •   No lease liability finance is recorded on the balance sheet of the employer

A Novated lease term is generally between two to five years. Only new and late model cars
will be entitled to be financed and accordingly the tax savings will only be available in these

Individuals should seek independent financial and taxation advice on the tax effectiveness of
a novated lease.

What are the benefits of having a Motor Vehicle Novated Lease?
Benefits arises from the employee being able to package the costs of the leasing and running
of the vehicle with PRE TAX dollars thus enabling the employee to save a considerable
amount in taxation.

Due to the fact that the employee is employed by a Public Benevolent Institution (PBI) there
are substantial fleet discounts on the price of a motor vehicle which can be accessed directly
by the employee.

There are also advantages to organisations that offer motor vehicle novated leases to its

These include: -
• Market competitive employee remuneration packages

•   The improvement in retention and recruitment of valuable personnel

•   Employer has no liabilities on its Balance Sheet

•   Employer has no obligations for any of the motor vehicle payments if the employee
    ceases employment

6                             CBB Novated Motor Vehicle Leasing Employer Booklet 
How does it work
The Process

    Step 1. Employee contacts Street Fleet

                                                          Purchasing a Used Car
          Purchasing a New Car
                                                    • Employee sources car, confirms with
        • Street Fleet sources car                    Street Fleet that it can be packaged

                                  Employee meets with CBB
                          •   Salary Packaging Analysis Completed
                          •   Motorcharge Card Application Form signed
                          •   Payroll Deduction forms completed

                     Employee authorises Street Fleet to purchase

                     Novated Lease Agreement Signed with Street

                                        Delivery of Car

    Step 2.   Once Salary Packaging commences

                1.   Payroll deductions sent to CBB
                2.   CBB pays all lease and running expenses
                3.   CBB Monitors Car expenses & mileage
                4.   CBB sends back GST on quarterly basis
                5.   Half yearly review arranged

7                             CBB Novated Motor Vehicle Leasing Employer Booklet 
How does it work
Employee Responsibilities

       1) To only use Motorcharge Card (see attachments) for the provision of all the
          expenses relating to the Novated motor vehicle.

       2) To ensure enough funds are held with the CBB to meet all necessary Novated
          Motor Vehicle Leasing expenses when they fall due. If required additional funds
          can be requested.

       3) To ensure that the Novated motor vehicle reaches it’s agreed yearly kilometre
          usage range. Failure to do so will result in additional costs to the employee.

       4) Ensure that the vehicle is insured at all times.

Employer Responsibilities
    1) To have salary deductions made to the CBB.

    2) To pass back GST credits relating to Novated leasing expenses, via monthly reports
       provided by the CBB, to the employee through salary and wages.

CBB Responsibilities

    1) To provide monthly reports to the employer and employee.

    2) To provide efficient, low cost administration and monitoring services.

    3) To provide a summary of FBT obligations.

    4) To provide yearly review of expenses with the employee.

Street Fleet Responsibilities
    1) To provide fast and efficient approvals for finance.

    2) To provide competitive vehicle pricing.

    3) To provide a service to enhance CBB’s relationship with its clients.

8                             CBB Novated Motor Vehicle Leasing Employer Booklet 
The Service
The CBB provide the following service:

             •   Setting up of the Novated Vehicle Quotation
             •   Full analysis of total running costs
             •   One-on-one interviews with your employees
             •   Monthly Reports to employee
             •   Monthly Reports to employer – GST & FBT
             •   Low monthly administration fee
             •   Annual review of expenses
             •   No hidden costs

Fee for Service
Our Novated Motor Vehicle Salary Packaging Administration fee is $17.50 (+GST) per
fortnight per employee. This administration fee is charged directly to the employee who is
able to package this fee within their total salary packaging benefits, each payday.

        Please note there are no commissions payable to the CBB from Street Fleet

Our Commitment to you
The CBB is committed to providing you with;

    •   a tailored Novated Motor Vehicle Leasing service to meet your company and
        employee needs
    •   calculation of your employees eligible FBT limits – we take the guess work out of
        Salary Packaging
    •   notification of any relevant Legislative changes relating to Novated Motor Vehicle
    •   a reporting structure to assist you in meeting all your GST & FBT requirements
    •   a service where we assist you in monitoring any employees’ risk of exceeding their
        FBT limits

Our Commitment to your employees
The CBB is committed to providing to your employees;

    •   a reliable and accurate Salary Packaging service
    •   a prompt response to their enquiries
    •   statement information which is up-to-date, accurate and available regularly
        - emailed, posted or via our website
    •   security measures to protect their funds

9                             CBB Novated Motor Vehicle Leasing Employer Booklet 

10    CBB Novated Motor Vehicle Leasing Employer Booklet 
Employer Report

                  Page 11
                      Novated Motor Vehicle Leasing
                     EMPLOYEE DECLARATION FORM.

I authorise the Community Business Bureau to act as my agent in respect to the Novated
Motor Vehicle Salary Packaging administration and undertake to pay the relevant fees
associated with this service and further acknowledge and agree the following:

•     I will keep all records relating to packaging for 7 years (photocopies)
•     I will meet any FBT arising from the implementation of Salary Packaging
•     I acknowledge that my employer has recommended that I obtain independent financial
      advice prior to commencing salary packaging
•     I acknowledge that upon ceasing employment with my current employer my Novated
      motor vehicle salary packaging arrangement will cease and any funds held will be
      returned to me via the PAYG system after a period of two months or before the end of
      the current FBT year, whichever occurs first
•     I acknowledge that upon ceasing employment I will immediately become personally
      responsible for any and all the payments required as part of the Novated lease and the
      running costs of the Novated motor vehicle.
•     I acknowledge that any GST claimable credits will be claimable and claimed by my
      employer, who will then pass on these credits to myself in the form of taxable salary
      and wages
•     I acknowledge that, at the discretion of the employer, any FBT charges arising as a
      result of myself exceeding expenditure of $16,050 ($16,050 x 1.8692 = $30,000 cap) in
      any FBT year (1/4 – 31/3) would be borne by myself
•     I acknowledge the need for me to make choices that are in my best interest and within
      my financial means
•     I acknowledge that taking large amounts of my remuneration package as non cash
      benefits may mean I have insufficient cash salary to meet my day to day requirements
•     I acknowledge the need for me to provide all the necessary documentary
      substantiation of expenses before payment will be made
•     I acknowledge and agree that the packaged amounts the CBB receives on my behalf
      will be held by the CBB until it makes the relevant payments and that the CBB is
      entitled to retain any interest or other benefits it derives through holding the packaged
      funds or making payments on my behalf

NAME: …………………………………………………………..…………..

COMPANY ………………………………………..…….…………………..

CONTACT NO: Hm: ……………… Wk: ……………… Mobile………………..

EMPLOYEE SIGNATURE…………….................…………………….. /                      /   .

                                                                                        Page 12
Motorcharge Statement

                        Page 13
         Example of a Novated Motor Vehicle Lease

                                         Fully              Fully
                                       Packaged          Packaged            No
                                      + Nov Lease       No Nov Lease      Packaging

Salary Packaging Limit                $    16,050       $    16,050       $   16,050

Gross Salary                          $    40,000       $    40,000       $   40,000

Novated Leasing                       $   (14,195)      $             -   $            -

Non Cash Benefit Remaining            $   (12,040)      $   (16,050)      $         -

Taxable Wages                         $    13,765       $    23,950       $   40,000

Tax                                   $    (1,371)      $     (3,052)     $   (7,950)

Net Wages                             $    12,394       $     20,898      $   32,050
Add Back
Non Cash Benefit Limit Available      $    12,040       $     16,050      $         -
Less CBB Fee                          $      (330)      $       (330)
Total Disposable Cash                 $    24,104       $     36,618      $   32,050

Less Motor Vehicle Running Costs      $             -   $     14,903      $   14,903

Net Disposable Cash                   $    24,104       $    21,715       $   17,147
Savings                                                 $     2,389       $   4,568

Based on the following information / assumptions:

New 6 cylinder motor vehicle costing $33,000

Annual kilometres are 25,000

Total running costs approximately $7,400 in the first year

Lease is for a 3 year period with a residual value* of 45% ($14,850)

* Residual Value is the amount that the employee must pay to the leasing
company at the end of the lease term. This payment will result in the
employee then becoming the owner of the vehicle. Please note the
residual value may not equate to the actual market value of the vehicle at
that time.

                                                                              Page 14
Services Available;

•   Salary P ackaging
•   S           la
     trategic P nning
•   Business P lanning
•    isk
    R Ma na gement
•   Corporate Governance
•   Payroll Services
•   Viability Assessment
•   Quality S ystems & Audits
•   Recruitment S  ervices
•   Finance & Accounting
•   Performa nce Mea sures
•   Ma rketing
•   Grant Applications
•      ,
    HR IR & OH & S
•   Orga nisationa l Reviews

Community Business Burea u Inc.
    102 Woodville R d
     Woodville S 5011

      Ph    1300 763 505
      Fax   08 8244 9145
     A N 57 098 352 150

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