What is a Novated Lease by qsu16242


									1. Vehicle Selection

Following is more information about novated leasing, vehicle eligibility and selection. This is general
information and aims to introduce employers and drivers to novated lease concepts.

For details about your specific LeasePlan product and all of its services, please call the LeasePlan
Novation Centre on 1300 668 572 or send an email to cservice@leaseplan.com.au with the subject:
‘Please Send Me a Novated User Guide’. Thank-you and happy reading.

What is a Novated Lease?
A Novated Lease is a triangular arrangement whereby an employee takes on personal finance for a
vehicle (usually a finance lease) and 'novates' it to his/her employer who then becomes responsible for all
the lease payments while the employee is employed. The monies required by the employer to make the
lease payments are deducted from the employee's pre-tax salary.

What is a LeasePlan Novated Lease?
In addition to financing the vehicle, LeasePlan manages all services associated with running a vehicle:
insurance, fuel (via fuel cards), maintenance, repairs, tyres, roadside assistance, etc.

Thanks to our 21 years experience in Australia and the size of the fleet under LeasePlan management,
you benefit from extremely competitive prices on all these costs, including major discounts on the
purchase price of the vehicle itself. If your Novated Lease is managed following our Open Calculation
philosophy, detailed reports keep you informed of actual costs vs. salary deductions on a monthly basis.
At the end of your lease, we reimburse to you (via employee payroll) any amounts paid but not spent.

Who is entitled to a Novated Lease?
LeasePlan is able to provide Novated Leases to any employee provided that their employer has entered
into a general leasing agreement with LeasePlan and that their personal credit application has been
approved. Novated Leases cannot be offered to full-time employees during their probation period.

What type of vehicle can be leased?
Any passenger vehicle can be leased as a novated lease. This excludes motorcycles and commercial
vehicles with a 1 tonne carrying capacity or more. But it includes second-hand passenger vehicles
provided that they are less than four years old (and 100,000 km) and will not be more than seven years
old (and 200,000 km) at the end of the lease. LeasePlan may also agree to purchase your existing
vehicle and re-lease it to you under a novated lease arrangement.

What are the benefits of Novated Leases?
If you take on a Novated Lease with LeasePlan you have the option of having all your vehicle expenses
(including fuel, insurance and all other running costs) deducted from your salary as pre-tax payments.
This usually presents a net tax advantage. In addition, your vehicle costs are evenly spread in equal
monthly payments, making it easier to manage your household budget. Lastly, you are building equity
into the vehicle and in most cases you are able to sell the vehicle at the end of the lease for more than it
costs you to purchase it back from LeasePlan. This plus value is tax-free.

Which taxes affect Novated Leases?

                                                                                         It's easier to leaseplan
Two taxes affect Novated Leases: GST and FBT. The GST is charged by LeasePlan to the employer but
it is not included in the salary deductions (unless the employer cannot claim input tax credits). FBT is not
charged by LeasePlan but it is due by the employer and deducted from the employee's salary. The total
FBT due is also added to taxable income of the employee as reportable FBT. Despite FBT, Novated
Leases are tax effective in most cases and LeasePlan suggests you consult a tax adviser or accountant
who can assess your personal situation.

How is FBT calculated?
The amount of FBT due depends on the purchase price of the vehicle and on the number of kilometres
travelled over the FBT year (1 April to 31 March). The greater the distance travelled, the lower the tax.

What is the process involved?
Initiating a Novated Lease is a fairly complex operation which cannot be completed in one day. Having a
good understanding of the process involved in starting a new Novated Lease will help you, your Employer
and LeasePlan to ensure that everything is done as efficiently as possible.

What happens at the end of the lease?
At the end of the lease, you can return the vehicle to LeasePlan or we may agree to sell it to you for its
nominated residual value.

Can the lease be terminated early?
If your employment terminates, several options are available to you depending on the agreement made
between your employer and LeasePlan. Typically, you may be able to return the vehicle to LeasePlan,
novate it to your new employer, or continue the lease as a private individual. These options need to be
discussed with LeasePlan on a case-by-case basis.

A decision only you can make
There are many factors to take into account when selecting the vehicle: what you like, how much you
want to spend, the costs of running different vehicles, their re-sale value after a few years, your
employment situation, your financial/tax situation etc. These are personal factors and choosing the right
vehicle is one that only you can make. We have developed the tools below to help you make the right
choice and it is important that you explore these avenues thoroughly before contacting LeasePlan.

Vehicle selection
Want to know more about a particular vehicle? Our online ‘Vehicle Finder’ has links to manufacturers'
web sites. Factors such as vehicle type, duration of the lease, distance travelled and future value etc. all
have an impact on the total lease costs. Via the Drivers Online ‘Affordability Calculator’ link you can
identify how much you want to spend.

Quote simulator
Novated leases are more affordable than you may think. To help you decide on the vehicle which is best
for you, use our Drivers Online ‘Package Calculator’. Try a variety of please parameters (such as vehicle
make/model, duration of lease, residual value etc.) and see the impact on your income.

Please Note: LeasePlan’s online ‘Package Calculator’ provides accurate lease quotes in real time, it is
designed to help you hone-in on your choice before sending a formal request to LeasePlan.


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