Flexitech Driver Kit 080305

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					 Flexitech Group Pty Ltd



Novated Lease Information
           Kit




            1
                                                                          INDEX
INTRODUCTION .................................................................................................................................. 3
BACKGROUND .................................................................................................................................... 3
WHAT IS A NOVATED MOTOR VEHICLE LEASE? .......................................................................... 5
   SUMMARY OF NOVATED LEASE BENEFITS .................................................................................................5
   ANALYSING THE FINANCIAL BENEFITS OF A LEASED MOTOR VEHICLE USING OUR NOVATED
   LEASE ...............................................................................................................................................................6
   NOVATED LEASE SIMULATOR .......................................................................................................................6
   ADVANTAGES OF OUR NOVATED LEASE ....................................................................................................7
LEASE OPTIONS ................................................................................................................................. 8
   NOVATED FINANCE LEASE ............................................................................................................................8
   NOVATED OPERATING LEASE.......................................................................................................................8
   SALE LEASE BACK OF EXISTING VEHICLES ................................................................................................8
LEASE INCLUSIONS ........................................................................................................................... 9
   VEHICLE SOURCING / PURCHASING ............................................................................................................9
   VEHICLE REGISTRATION ...............................................................................................................................9
   COMPREHENSIVE INSURANCE .....................................................................................................................9
   VEHICLE SERVICING AND MAINTENANCE ...................................................................................................9
   ROADSIDE ASSISTANCE .............................................................................................................................. 10
   FUEL ............................................................................................................................................................... 10
   NOVATED LEASE PROTECTION INSURANCE ............................................................................................ 11
ADDITIONAL INFORMATION ........................................................................................................... 12
   CREDIT APPROVALS ....................................................................................................................................12
   LEASE RENTAL PAYMENTS .........................................................................................................................12
   TERMINATION OF EMPLOYMENT OPTIONS ............................................................................................... 12
   WHAT HAPPENS AT THE END OF THE LEASE TERM? ..............................................................................12
   EXCESS KILOMETRE CHARGES..................................................................................................................13
   FAIR WEAR AND TEAR (OPERATING LEASE ONLY) ..................................................................................13
   GOODS AND SERVICE TAX (GST) ...............................................................................................................14
   FRINGE BENEFITS TAX (FBT) ......................................................................................................................14
   METHODS OF FBT CALCULATION ...............................................................................................................15
   THE STATUTORY FORMULA METHOD ........................................................................................................15
   RECOGNITION BY THE AUSTRALIAN TAXATION OFFICE .........................................................................16
   LUXURY CAR LEASES (GST EXCLUSIVE) ...................................................................................................16
HOW TO OBTAIN A NOVATED LEASE ........................................................................................... 18
EXPECTED PROCESS TIME FRAMES ............................................................................................ 19




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INTRODUCTION

FLEXITECH GROUP PTY LTD has provided you with the opportunity to obtain a motor vehicle of your
choice, under a novated lease agreement, subject to the type of vehicle selected complying with
Flexitech Group Pty Ltd‟s motor vehicle policy and satisfactory completion of the necessary credit
approval processes. The cost of the vehicle will be reflected within your remuneration package via a
salary sacrifice arrangement, and paid from your pre-tax salary.

Subject to eligibility criteria, additional vehicles may be included within your employment package.

We are delighted that FLEXITECH GROUP PTY LTD has chosen our company as an approved
provider of novated leasing services.

Our Novated Lease has been tailored to meet the specific requirements of both you and FLEXITECH
GROUP PTY LTD, and will operate in conjunction with your normal salary packaging arrangements.

As agreed with FLEXITECH GROUP PTY LTD, eligible employees / contractors who elect to finance a
new vehicle with us will benefit from our competitive interest rates as well as discounted vehicle
purchasing, maintenance and operating costs at „fleet prices‟.

By selecting a Fully Maintained lease option, all your vehicle operating expenses can be covered
including insurance, registration, servicing and maintenance, in order to provide you with lower overall
motoring costs.

This kit has been designed to provide you with information on Novated Leasing, to assist you with your
decision on the most suitable type of vehicle lease for your needs and to facilitate the prompt
processing of your application.

If you require additional information at any stage regarding your lease, please contact the our Novated
Lease Call Centre on:

Phone:          (03) 9882 9899
Fax:            (03) 9882 6454
E-mail:         vicaccountmgr@fleetaustralia.com.au

BACKGROUND

Fleet Australia is a fleet management specialist at the forefront of the Australian fleet leasing and fleet
management industry. We provide a diverse range of services to our client base, which includes
many of Australia‟s large private and public sector corporations.

Our origins in Australian fleet leasing and fleet management lie in the formation of Leaseway
Transportation Pty Limited in 1986, by its founders who had prior experience in the New Zealand
vehicle rental business as far back as 1963.

In 1988 Leaseway was appointed the exclusive Fleet Manager for CBFC, the finance company
subsidiary of Commonwealth Bank of Australia. That appointment led to the establishment of a
business relationship that continues today. Leaseway brought fleet management expertise to the joint
venture, whereas CBFC brought financing capability for the underlying leases.



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In 1996, the Commonwealth Bank formed Fleet Care Services Pty Limited (FCS) on acquiring some of
the vehicle fleet management business of TNT Australia. This business was acquired independently
of the Leaseway/CBFC joint venture.

In 1997, the Commonwealth Bank acquired Leaseway Transportation Pty Limited from its founding
owners, and with it the principal operating company Leaseway Australia Pty Limited.

In 2000, Leaseway Australia Pty Limited changed its name to Commonwealth Fleet Lease Pty Limited.

The Commonwealth Bank ran the two operating businesses (ie FCS and Leaseway Australia Pty
Limited) through joint management and facility sharing until 2001 when the operations of FCS were
transferred into Commonwealth Fleet Lease.

During our near 20-year history, we have established ourselves as one of the leading fleet leasing and
fleet management providers in the Australian market. Our range of services is comprehensive,
encompassing both operating leasing and finance leasing, as well as a full range of fleet management
including the management of fuel, maintenance, FBT, tolls and infringements. We have earned an
enviable reputation for our novated leases provided to corporate clients, and for our superior customer
service in all aspects of operations.

On 4 June 2004, the Commonwealth Bank sold its shareholding in the highly successful fleet
management business, Commonwealth Fleet Lease, to S.G. Fleet Services Australia Pty Ltd, a
subsidiary of Super Group Limited, a company listed on the Johannesburg Stock Exchange. An
Australian equity consortium, including Colonial First State Private Equity, is a shareholder in S.G.
Fleet Services Australia Pty Ltd.

Our ultimate parent, Super Group, operates an integrated supply chain management business whose
primary operating activities comprise supply chain management, fleet solutions, cross border
transport, motor vehicle dealerships and the wholesale and retail of automotive parts both in South
Africa and abroad.

Super Group is one of the top 30 industrial companies and 53rd largest company, measured by
market capitalisation, listed on the JSE Securities Exchange. At 30 September 2003, based on the six
months unaudited results, Super Group‟s total assets exceeded R3.7 billion and half-year revenues
exceeded R3.3 billion, employing about 8,000 people.

Further information about Super Group can be found on their web sites, www.supergrp.com and
www.fleetafrica.com.

The June 2004 change in ownership represented an exciting phase in the history of our company and
provides a new basis for enhanced fleet management solutions for clients:

   Clients benefit from the intellectual property, knowledge and investment of a parent having
    specialist fleet management and related supply chain expertise.
   The Commonwealth Bank remains the principal financier for the underlying leases through its
    specialist asset finance subsidiary, CBFC Limited, thus continuing to offer highly competitive
    financing for our clients.
   Super Group has committed to expand its investment in Fleet Australia, including for development
    of state of the art systems technology.
   The business has retained its existing management team and all existing employees and offices,
    thereby providing continuity of service delivery.


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   The Commonwealth Bank has retained the opportunity to refer its Institutional, Corporate and
    Business clients having fleet leasing and fleet management needs exclusively to us.
   The Commonwealth Bank has committed to the long-term management of its own “tool of trade”
    and novated lease vehicle fleets (2,500 vehicles) by Fleet Australia.

We are extremely excited about the future. We have an owner who is committed to expanding the
product range and views fleet management as integral to its business. We intend to continue to grow
while retaining our core values that focus on excelling in customer service.

WHAT IS A NOVATED MOTOR VEHICLE LEASE?

Essentially, a novated lease is an arrangement entered into by three parties - Employer / Employee -
Contractor / Financier - which enables the employee / contractor to lease a car of their choice within a
negotiated salary packaging arrangement.

Under the more specific terms of the agreement, the employee / contractor leases the vehicle from the
financier under either an operating or finance lease. In turn, and with the consent of the financier, the
employee / contractor novates the lease to their employer. Under this “novation”, the obligation to
meet lease rentals and other conditions of the lease is transferred to the employer for the term of the
novation agreement. The employer in turn usually puts into place arrangements with the employee /
contractor to deduct payments from the employee / contractor gross remuneration under agreed salary
sacrifice arrangements.

During the course of the arrangement, the employee / contractor enjoys use of the motor vehicle as
provided for in the lease.

Upon advice to us that employment with the employer has ceased, the novation expires immediately,
with all future obligations under the lease agreement reverting to the employee / contractor.

By its very nature, novated motor vehicle leasing is a central component of personal financial planning,
which varies according to the unique legal, financial and taxation profile of each person. Our
comments regarding novated leasing are general in nature and should not be relied upon as a
substitute for professional personal advice or as a basis for formulating personal financial planning
decisions. Because of the frequency of legislative changes, we recommend that you consult an
independent expert (eg: Accountant or Financial Adviser) when making these decisions.

SUMMARY OF NOVATED LEASE BENEFITS

       Vehicles may be financed net of GST which may reduce lease rentals (depending on Flexitech
        Group Pty Ltd‟s ability to claim GST Input Tax Credits).
       You may lease the vehicle of your choice (new or used), subject to employer approval and
        term and kilometre requirements.
       Reduced lease payments and FBT liability as vehicles are sourced by us at discounted prices.
       Professional control and monitoring of maintenance and repairs.
       Lease payments normally fixed for the term of the lease.
       Flexible terms in the use of the vehicle.
       The lease is portable if you leave Flexitech Group Pty Ltd (subject to any new employer‟s
        policies and some lease inclusions may require removal).
       We can assist in disposing of your existing owned vehicle.
       Access to our considerable expertise.


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       Depending on individual circumstances, employees / contractors can build "notional" equity in
        the vehicle (finance lease) whilst also getting the tax benefits of salary packaging their motor
        vehicle.

ANALYSING THE FINANCIAL BENEFITS OF A LEASED MOTOR VEHICLE USING OUR
NOVATED LEASE

If you like the idea of a novated lease arrangement but are unsure of the financial benefits, the table
overleaf may be helpful. This table incorporates all the usual expenses associated with leasing or
buying a car, including FBT liability and operating costs.
As you can see, the end result confirms the benefits of remuneration packaged leasing across
common scenarios.

General assumptions of the example overleaf:
 Financing costs assume a four-year term, 35% residual value and an interest rate of 9.00% p.a.
 All vehicles are assumed to travel 25,000km p.a. (11% FBT fraction).
 Annual Operating Costs are assumptions only.
 Tax rates for 2003/2004 are used and include a Medicare levy of 1.5%.
 Financing costs exclude any statutory charges that may apply in each state.
 FBT gross-up factor of 2.1292 has been used.
 The novated lease finance costs are net of GST due to the input tax credit on the purchase of the
   vehicle.

NOVATED LEASE SIMULATOR

For additional information regarding Novated Leasing, Fringe Benefits Tax, Goods and Services Tax
or Post Tax Employee / contractor Contributions consult our Website at www.fleetaustralia.com.au

Go to “Products”, click on “Novated Leasing” for more information and then select the Novated Lease
“Calculator”. This will enable you to calculate the advantages of a Novated Lease for yourself.




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ADVANTAGES OF OUR NOVATED LEASE

                                                        $40,000                         $80,000                         $100,000
Employee's annual gross salary package
                                                  Private         Novated         Private         Novated         Private      Novated
                                                 Purchase          Lease         Purchase          Lease         Purchase       Lease


Vehicle purchase price (inc GST)                    $25,000         $25,000         $35,000         $35,000         $55,000         $55,000

Interest Rate                                           9%              9%              9%              9%              9%              9%

Lease Term                                              48                  48          48                  48          48               48

Financed costs per annum                             $5,598          $5,598          $7,837          $7,837         $12,316         $12,316

Operating costs                                      $5,500          $5,500          $5,500          $5,500          $5,500          $5,500

Total costs                                         $11,098         $11,098         $13,337         $13,337         $17,816         $17,816


Less GST input tax credit on vehicle costs                           $1,009                          $1,212                          $1,620

Pre-Tax cost to salary package                                      $10,089                         $12,125                         $16,196

After tax salary required                           $11,098                         $13,337                         $17,816

FBT payable                                                          $2,840                          $3,976                          $6,248

Total pre-tax cost to salary package                                $12,929                         $16,101                         $22,444

Equivalent cost from pre-tax income                 $16,202                         $25,898                         $34,594

Annual pre-tax savings with Novated
Lease                                                                $3,273                          $9,797                         $12,150

Residual value                                       $8,750          $7,955         $12,250         $11,136         $19,250         $17,500

Plus GST at 10%                                                        $795                          $1,114                          $1,750

Total residual value                                 $8,750          $8,750         $12,250         $12,250         $19,250         $19,250


Whole of life pre-tax finance & operating cost      $64,806         $51,716        $103,591         $64,402        $138,375         $89,775

Pre-tax residual cost                               $12,774         $12,774         $23,786         $23,786         $37,379         $37,379

Total pre-tax cost                                  $77,580         $64,490        $127,377         $88,188        $175,754        $127,154

Total savings (pre-tax) whole of life +
residual                                                            $13,090                         $39,189                         $48,600

Total savings (after tax) whole of life +
residual                                                             $8,967                         $20,182                         $25,029




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LEASE OPTIONS

We are able to offer the following lease options to achieve maximum flexibility and convenience:

       Novated Finance lease
       Novated Operating lease

NOVATED FINANCE LEASE

In a finance lease the employee / contractor takes the risk on the residual value of the vehicle similar
to that which would apply for a loan. The residual value is structured into the lease, generally at a
specific percentage, according to Australian Tax Office guidelines and is payable on the date of lease
expiry. A finance lease may be especially attractive to employees / contractors interested in
ownership of the vehicle at the end of the lease period. It is not unusual for an employee / contractor
to make an offer to buy the vehicle at the nominated value, rather than return the vehicle to the
financier for sale and subsequent settlement of any variance from the nominated residual value.

Generally a lessee cannot pay a lump sum deposit, such as from the proceeds of the trade-in of an
existing vehicle, towards a lease as the establishment of equity, from a tax perspective, contradicts the
nature of a lease.

Our finance lease residual value guidelines

Lease Term                       Residual Guidelines
12 Mths                          65.00%
24 Mths                          55.00%
36 Mths                          45.00%
48 Mths                          35.00%
60 Mths                          25.00%

NOVATED OPERATING LEASE

An operating lease is similar to a car rental arrangement in that we take the risk on the residual value
of the vehicle at the end of the lease period. The residual value is determined by us based on our
experience in the used motor vehicle market.

At the end of the lease the employee / contractor simply returns the vehicle to us and is only
responsible for any damage to the vehicle and any end of lease adjustments. This carries no residual
value risk to the employee / contractor, however we will consider an offer to purchase the vehicle at
the market value at the end of the lease.

An operating lease provides the flexibility for those looking to update vehicles at regular intervals, and
it is particularly attractive for those who want no residual value obligation at the end of the lease.

SALE LEASE BACK OF EXISTING VEHICLES

With our Novated Lease you even have the option of selling your (unencumbered) existing vehicle to
us and we will lease it back to you via an operating or finance lease. However, the maximum age of
the vehicle cannot exceed a stipulated age (as determined by us from time to time) at the end of the
lease. [Note – because an Input Tax Credit may not be available on the purchase of your own vehicle,
the tax consequences of this type of transaction may vary and not be as favourable as a similar
vehicle purchased through a dealer].

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LEASE INCLUSIONS

VEHICLE SOURCING / PURCHASING

Due to the volume of vehicles we purchase under finance and management arrangements, we are
able to negotiate with our network of Key Dealers on the purchase price of your new vehicle and
organise trade-in valuations if you have a vehicle you wish to dispose of. However, proceeds from the
trade-in cannot be used to reduce the amount financed in the lease. We normally use around three
dealers for each major manufacturer in each capital city to ensure quality service, availability and
price.

Vehicles supplied by our key dealer are delivered under strict guidelines that we specify.

Accordingly, it is our recommendation that you contact us in the first instance to enable us to obtain a
competitive purchase price on your behalf. By doing this we may be able to help you to avoid paying
too much for your new novated lease vehicle.

VEHICLE REGISTRATION

Registration and Compulsory Third Party (CTP) Insurance may be included for the full term of the
lease including the initial registration of the vehicle. Vehicles are registered in the employee /
contractor's name and care-of our address. This ensures that all renewals are forwarded direct to us
for payment before distribution to the employee / contractor.

COMPREHENSIVE INSURANCE

You can comprehensively insure your vehicle in your name through a third party insurer that has a
special policy for our novated fleet. This way the insurance premiums can be included within the
monthly lease rental and paid for from pre-tax salary.

A separate document is available which specifically outlines the benefits of this comprehensive
insurance policy.

When arranging this insurance, we act as an authorised representative of insurance broker, Marsh Pty
Limited.

It is not compulsory to accept this offer to include the insurance premium within the lease rental.
However all vehicles must be comprehensively insured, with proof of insurance to be provided before
vehicle delivery.

VEHICLE SERVICING AND MAINTENANCE

It is the driver‟s responsibility, and in their best interest, to ensure the vehicle is serviced and
maintained at the correct intervals, throughout the term of the lease agreement.

Each vehicle under a managed maintenance lease is provided with a Driver's Handbook outlining
procedures when booking the vehicle in for service at the nearest dealer service outlet. The vehicle is
simply booked in for service in the name of Fleet Australia. All service/maintenance work to be
completed is identified, and the service centre contacts our Maintenance Control area for the
necessary authorisation. Invoices from the service centre are then directed to us for payment. We will
be responsible for the cost of all maintenance necessary for the proper and efficient operation of the
vehicle (but not refurbishment or repairs occasioned by neglect or abusive operation of the vehicle).

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Under a Fully Maintained lease, all manufacturer's scheduled servicing, normal wear and tear,
mechanical repairs including batteries and a specified number of replacement tyres are included within
the lease rentals with costs incurred being underwritten by us.

The major benefits of selecting a Fully Maintained Lease include:
 Repairs and maintenance costs are included within monthly lease repayments, as a fixed monthly
   fee usually paid from pre-tax salary.
 Costs are underwritten, (guaranteed), by us. No risks of over spending due to high cost repairs.
 Prevents cost “blow-outs” due to inflation and price increases.
 Ensures GST input tax credits are captured. Input Tax Credits will be clearly identified and
   claimed.
 Actual repair costs are invoiced at Trade pricing structures, which reduces overall vehicle
   operating costs.
 All repairs are authorised by qualified Maintenance Controllers.
 Provides the ability of a fully transportable novated lease, including repairs and maintenance.
 Eliminates the need for employees / contractors having to physically pay for operating costs and
   then seek reimbursement for costs incurred.

We will structure a Fully Maintained Operating or Finance Lease for a maximum lease period of five
years.

ROADSIDE ASSISTANCE

Membership of Fleet Australia Roadside Assist is provided if the vehicle manufacturer does not
provide a similar cover eg. Holden have a roadside assistance program referred to as Holdenwise.
Our roadside assistance program is exclusive to our customers, ensuring that your vehicle receives
the 24-hour/7 days roadside service with minimum delay.

FUEL

Fleet Australia/Caltex Fuel Card

We have an arrangement with Caltex Australia to offer our customers a Caltex StarCard to purchase
fuel for their novated lease vehicle. Fuel purchased on the co-branded StarCard will be provided at
the pump price or the discounted “card price”, whichever is the lowest. The Caltex card price is a
benchmarked daily price that enables Caltex to offer a rebate to their valuable commercial customers.
The card price is calculated daily, based on the company‟s wholesale price for fuel supplied to service
stations and market movements in pump price across any card pricing territory. Generally there is a
Caltex card price for each capital city and its surrounding major regional towns. For example, Sydney,
Wollongong and Newcastle have the same card price.

The StarCard system will automatically compare the difference between your card price discounted
rate and the prevailing pump price, and in the unlikely event the pump price is lower than the card
price, you will be charged the lower of the two prices.

The daily Caltex card price can be obtained by calling StarCard on 1800 819 325 or by visiting the
Caltex Australia website at www.caltex.com.au.

The Caltex StarCard will provide you access to the largest fuel provider network nationally, with 2,415
sites, compared with the next largest network with only 1,611 sites (source, Caltex Australia, current
November 03).


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It should be noted that a standard transaction fee would also apply.

Subject to agreement between us and Flexitech Group Pty Ltd, a fuel provision may be established
and included within the lease rentals based upon estimated fuel consumption for the vehicle and the
kilometres to be travelled under the lease. An annual reconciliation will be conducted on the provision
versus actual fuel used for the vehicle, with any surpluses/shortfalls being to the account of the
employer for adjustment to the employee / contractor‟s salary.

NOVATED LEASE PROTECTION INSURANCE

An insurance premium payable to an external insurer can be included within the monthly lease rentals
to cover you in the event that you are involuntarily made redundant from your position. If this should
occur you have the option to return the vehicle, with the lease break costs up to specified maxima
being covered, or retain the vehicle for a period of up to four months, in order to find alternate
employment, and have a maximum of three lease rentals paid for you. If you are still unable to locate
alternate employment after four months, you may return the vehicle and have the lease break costs,
up to specified maxima, paid. This insurance policy also covers the lease break costs to specified
maxima in the event of death or total and permanent disablement.

When arranging this insurance, we act as an authorised representative of insurance broker, Marsh Pty
Limited.

Further details regarding this offer can be obtained from the policy document.




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ADDITIONAL INFORMATION

CREDIT APPROVALS

   Approval is subject to our standard terms and conditions.
   Applicants are assessed on their personal financial position.
   Decisions are normally available within 48 hours of receipt of an application.
   Fees and charges may apply.

LEASE RENTAL PAYMENTS

Your first monthly lease rental will be billed to Flexitech Group Pty Ltd at the time of delivery of your
new vehicle and will be due for payment immediately. Each subsequent lease rental will then be billed
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at the commencement of each new month and will be due for payment by the 15 of that month.

TERMINATION OF EMPLOYMENT OPTIONS

Upon our receiving advice that an employee / contractor has ceased their employment, the novation is
cancelled and all future obligations, including lease payments become the responsibility of the
employee / contractor. Should this situation occur the following options are available:

   The lease can be re-novated to a new employer (subject to the consent of that employer and
    ourselves) by execution of a new novation agreement.
   You may wish to make an offer to purchase the vehicle and terminate the lease. A purchase price
    can be obtained by contacting us.
   The vehicle can be returned to us. You will be liable for any shortfall between the lease payout
    and the market price of the vehicle.
   The lease may be restructured to reflect the vehicle's new usage patterns.

Fees may apply for the above.

Please note, should a fuel provision be applicable to your lease, the fuel arrangement will be cancelled
upon cessation of employment.

WHAT HAPPENS AT THE END OF THE LEASE TERM?

Under a Novated Finance Lease

You indemnify us for the agreed residual value. You have no right under the lease contract to
purchase the vehicle at the lease end. However, in practice, we will consider an offer from you to
purchase the vehicle for the residual value.

Under a Novated Operating Lease

You simply return the vehicle to us, without obligation for the residual value but subject to payment for
any excess kilometre charge or unfair wear and tear damage. While you do not have a right to
purchase the vehicle, we will consider an offer to purchase the vehicle at the current market value as
determined by us.




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EXCESS KILOMETRE CHARGES

A vehicle‟s contracted kilometres is one of the factors used to determine the total lease rental to be
charged as distance/usage affects both the cost of maintenance and the “second hand‟ value of the
vehicle.

If your vehicle travels in excess of the lease kilometres you may be liable for an excess kilometre
charge at the end of the lease period. This excess kilometre charge will simply represent the
decreased value of the vehicle and/or the additional maintenance required as a result of the vehicle
travelling more kilometres than originally anticipated. The excess kilometre rate is defined in the lease
agreement.

If, after a reasonable evaluation period, it appears as though your vehicle is likely to either exceed or
under achieve the anticipated lease kilometres, it is possible to restructure your lease to more correctly
reflect the revised usage patterns (subject to a restructure fee).

It should be noted however that any under achievement of anticipated kilometres might also affect the
FBT liability in respect of your vehicle.

FAIR WEAR AND TEAR (OPERATING LEASE ONLY)

When returning a vehicle to us at the end of an operating lease, you will be liable for any damage to
the vehicle through neglect or abuse. The only exceptions to this will be for minor car park dents,
stone chips or scratches that have a total estimated repair cost of less than $350. These will be
considered as being fair wear and tear.

Broken or missing parts such as windscreens, mirrors, aerials, wheel covers, spare wheels and tools
are considered as being unfair wear and tear regardless of the values involved.

The lease contract defines the condition in which vehicles should be returned and what constitutes
"Fair Wear and Tear". We promote the Australian Fleet Lessors Association (AFLA) „Fair Wear and
Tear‟ Guide as a reference document to aid in the understanding of this important area. Copy of this
document is available on our website (www.fleetaustralia.com.au).




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TAXATION ISSUES

GOODS AND SERVICE TAX (GST)

Lease rentals and lease related charges, will generally be taxable. This means that the financier will
charge GST (10%) on normal lease rentals and other fees and charges. GST will also be payable on
the residual value and any „payout‟ of the lease agreement.

As ownership of the leased vehicle rests with the financier, the financier claims an input tax credit on
the vehicle purchased. This means that the lease rentals and residual value are based on the cost
price of the vehicle net of GST.

FRINGE BENEFITS TAX (FBT)

The employer-provided motor vehicle is one of the few salary package items that continue to attract
concessional taxation treatment. FBT is a Federal Government tax imposed on employers on the
value of certain fringe benefits that have been provided to employees / contractors (or to their
associates) in respect of their employment. The FBT year runs from 1 April to the following 31 March.

Under the FBT „gross up‟ rule, the value of the benefit is increased so that it is equivalent to the after
tax salary sacrificed amount of the benefit plus FBT at the marginal rate of tax. This is intended to
neutralise the tax benefit of receiving either a salary or salary benefit. However, motor vehicles remain
an attractive component of a remuneration package because they are concessionally taxed for FBT
purposes.

The introduction of GST has also impacted the FBT relating to motor vehicles. The intention of the
Federal Government is for the impost of GST to be borne by the consumer, which in the case of a
novated lease is the employee / contractor. However, the GST liability of employers can impact upon
the cost of motor vehicles (and other salary package items) to the employee / contractor. Accordingly,
the FBT regime introduces two FBT gross-up rates with the intention of delivering tax neutrality that
results from the varying GST liability of employers.

Where an employer is not able to claim a GST input tax credit for the costs associated with the
vehicle, the original pre-GST FBT gross-up rate will be applied – 1.9417 (type 2 benefit).

If the employer is entitled to a GST input tax credit, it will effectively reduce the cost of the benefit by
the amount of the GST input tax credit, thereby reducing the tax revenue to the Government.
Accordingly, to ensure the Government receives its intended revenue, a higher FBT gross-up rate of
2.1292 will apply (type 1 benefit).

The 2.1292 FBT gross-up rate only applies to the calculation of an employer‟s FBT liability. Employers
will continue to use the 1.9417 gross-up rate when determining an employee / contractor‟s „reportable
fringe benefit amount‟ disclosed on their payment summary.

Certain employers such as Public Benevolent Institutions are exempt or entitled to claim a rebate on
their FBT liability, lowering the cost of the benefit to the employee / contractor. The FBT introduces a
cap on the concessional treatment. Generally, a cap of $30,000 on the grossed-up taxable value
applies, although a lower threshold of $17,000 exists for certain employees / contractors within the
public hospital system and for non-profit hospitals. However, not all items are included when
determining whether an employee / contractor‟s threshold is exceeded.



                                                    14               df17d109-da3d-4968-a45f-2f3075879422.doc
METHODS OF FBT CALCULATION

Once you have established the FBT gross-up rate to the employer and its employees / contractors,
there are two methods available for calculating FBT for motor vehicles:
 statutory formula method; or
 operating cost method.

The statutory formula method makes no distinction between private and business use. It is therefore
the more appropriate method to use where a vehicle has high private use content. This is especially
the case where the employee / contractor‟s car never needs to be used for business purposes, and
still has a high kilometre use overall.

THE STATUTORY FORMULA METHOD

The statutory formula values employer-provided cars for FBT purposes at a percentage of their initial
cost, inclusive of GST but excluding registration and Stamp Duty.

The actual percentages for discounting the car‟s value vary according to the total kilometres travelled
each year.

For example, a vehicle valued at say $30,000, travelling 25,000 kilometres a year, has an FBT value
of $3,300 ($30,000 x 11% = $3,300).

FBT will be calculated and payable on the grossed-up motor vehicle value of $7,026.36 (3,300 x
2.1292).

Therefore:
Taxable FBT value = $3,300
FBT calculation = $7,026.36 ($3,300 x 2.1292)
FBT payable = $3,407.78 ($7,026.36 x 48.5%)

An amount of $6,407.61 ($3,300 x 1.9417) will also be included on the employee / contractor‟s
payment summary as a reportable fringe benefit.

Statutory formula method – applicable discount percentages
(based on kilometres travelled)


                     More than 40,000km
                           7%

                     25,000 to 40,000km
                               11%

                     15,000 to 24,999km
                                           20%

                     Less than 15,000 km
                                                    26%


                                                  15              df17d109-da3d-4968-a45f-2f3075879422.doc
All operating costs such as fuel, insurance, registration and servicing are not liable for FBT. However,
it is also worth noting that any after tax salary payments made by the employee / contractor towards
the cost of the vehicle will reduce the FBT liability.

For those employees / contractors or their families that travel long distances, the statutory method of
calculating FBT is particularly attractive.

RECOGNITION BY THE AUSTRALIAN TAXATION OFFICE

For some time taxation ruling IT 2509 has set out the income tax and fringe benefits tax implications
for novated motor vehicle leases. The ruling has been relied upon by many employers, including
governments and financial institutions, for a number of years.

Although taxation rulings (particularly TR1999/15) have subsequently been issued which narrow the
range of arrangements qualifying for concessional tax treatment as novated leases, our Novated
Lease documentation has been approved by the Australian Taxation Office (ATO).

Our Novated Lease arrangement generally constitutes „split-full novations‟ for the purpose of
TR1999/15, which ensures that the motor vehicle is deemed to be „held‟ by the employer for FBT
purposes, while the vehicle is perceived to be „owned‟ by the employee / contractor.

The lease payments are not intended to represent income in the employee / contractor‟s hands nor is
the employee / contractor entitled to claim them as a tax deduction.
The employer will normally be entitled to an income tax deduction for the lease rentals and other costs
such as fuel, registration, insurance and servicing.

Where the employer is registered for GST purposes they should be able to claim an input tax credit on
the GST paid on the lease payments. However, some employers because of the nature of their
business will not be able to claim an input tax credit (eg. Life Insurance Company).

LUXURY CAR LEASES (GST EXCLUSIVE)

The luxury car lease rules apply where the cost of the vehicle is greater than the threshold set by the
ATO. For the year ending 30 June 2005, the threshold will be $57,009.

For tax purposes, luxury car leases are treated as a sale to the employer by the financier with a
corresponding loan provided by us. The employer is entitled to depreciation (within limits set by the
ATO) and interest deductions during the lease term. Upon termination, expiry, extension or renewal of
the lease, a tax liability equal to a balancing charge and a notional loan adjustment may arise. These
amounts may increase or decrease taxable income depending upon the facts of the particular case.
These do not arise where the employee / contractor purchases the vehicle.

The balancing charge is the difference between the „adjusted consideration‟ on disposal and the tax
written down value of the vehicle. The „adjusted consideration‟ is simply a proportion of the residual
value, calculated in accordance with the following formula:

                     Residual Value x Tax Depreciation Limit/Original Cost of Car

The notional loan adjustment reflects the fact that the termination amount may differ from the residual
value used to calculate the accrued amounts. Some employers may decide to include this amount in
the employee / contractor‟s package. However, as the amount is not known until the end of the lease,

                                                  16               df17d109-da3d-4968-a45f-2f3075879422.doc
it may prove difficult or require mutually acceptable assumptions. This adjustment may produce an
allowable deduction for the employer in certain circumstances, for instance, where the market value is
greater than the residual value.

The amount of the adjustment is the difference between (A) the sum of total lease payments and the
market value of the car (at termination) and (B) the sum of the notional loan amount (original cost of
the car) and notional interest charges on the lease.

Where a lease is renewed or extended, the vehicle‟s residual value is calculated. The vehicle is then
deemed to be sold and reacquired for this value. The notional depreciation and interest charges still
apply and future tax depreciation is worked out on the „adjusted consideration‟ mentioned earlier.
Furthermore, the notional loan adjustment, discussed above, is included in the taxable income of the
employer and the financier.

The luxury car lease rules are complicated and you should seek your own advice in relation to the tax
implications of such leases.




                                                 17              df17d109-da3d-4968-a45f-2f3075879422.doc
HOW TO OBTAIN A NOVATED LEASE

What do I need to do?

1.     Complete the Novated Lease Quotation Request form. If you are unsure of the type of vehicle
       or lease details you require, please contact us on (03) 9882 9899, for assistance.

2.     Forward the completed Quotation Request form to us on either:
       FAX (03) 9882 6454, or
       E-MAIL on vicaccountmgr@fleetaustralia.com.au

3.     We will provide you with a Lease Quotation and in some circumstances an estimation of total
       salary sacrifice for the vehicle and lease that you have selected.

4.     When you are ready to accept a lease quotation, fax the following to us on (03) 9882 6454:

          Completed and signed Quote Acceptance - the lower section of the lease Quotation
          Statement of Personal Financial Position
          Supporting documentation eg council rates notice & current home loan statement (for
           each property if applicable)
          Letter of Employment – this should confirm your commencement date and current salary
           and be signed by your Human Resources (HR) department.


5.     After credit has been approved, the Lease Agreements and Novation Agreements will be
       drawn up and forwarded to you for execution. A Novated Lease Protection Insurance (NLPI)
       application form will also be forwarded to you for completion, if applicable.

6.     All three copies of the Lease documents are to be executed by you and then forwarded to
       your HR department for execution, together with the NLPI application form, if applicable.

       For second-hand vehicles, also provide a copy of registration papers and a tax invoice from
       the dealer/vendor for the amount in question.

7.     Your HR department will execute the lease documents as required and return them to us on
       your behalf.

8.     If Comprehensive Insurance has not been placed with the third party insurer that we can
       arrange, then you must submit to us proof of insurance cover for your motor vehicle, prior to
       delivery. Please note that Comprehensive Insurance on your novated lease vehicle is
       compulsory.

9.     The vehicle is ordered and then delivered to you by the nominated motor vehicle dealer.

10.    We will pay the dealer directly for the vehicle.

11.    A copy of the completed lease documents are then returned to you for your records together
       with a Vehicle Schedule, after delivery of your motor vehicle.




                                                   18           df17d109-da3d-4968-a45f-2f3075879422.doc
EXPECTED PROCESS TIME FRAMES

Where possible, we will endeavour to provide information and documentation within the following time
frames. Please note that the majority of functions performed by us are reliant upon information and
documentation being provided by various outside sources beforehand.

   Lease Quotations provided for new locally manufactured passenger vehicles within two working
    days of receipt of lease quotation requests.

   Lease Quotations provided for all other new vehicles within three working days of receipt of lease
    quotation requests.

   Lease Quotations provided for all second hand vehicles within four working days of receipt of
    lease quotation requests.

   Credit applications to be processed within two working days of receipt of application.

   Lease documents drawn up and dispatched to employee / contractor within two working days of
    receipt of credit application.

   Vehicle Orders to be placed with supplying Dealer within two working days of receipt of signed
    lease agreements.

   Confirmation of Salary Sacrifice to be provided within five working days after the receipt of the
    Vehicle Invoice and Registration papers from the selling Dealer.

   Fuel Cards ordered within one working day of receipt of registration papers from selling Dealer.

   Fuel Cards dispatched to employee / contractor within one working day of receipt by us.




                                                   19              df17d109-da3d-4968-a45f-2f3075879422.doc
                   Novated Lease Quotation Request New Vehicles
                                       FLEXITECH GROUP PTY LTD

FAX TO:              03 9882 6454 or email to vicaccountmgr@fleetaustralia.com.au
ATTN:                CUSTOMER SERVICE
DATE:

PERSONAL DETAILS
Full Name

Business Telephone                      B( )
Mobile Telephone                        M
Fax                                     ( )
E-Mail
Are You Entitled to an                  Yes
Employer Provided Vehicle?              No
Employee / Contractor Number

VEHICLE DETAILS                                Vehicle 1                        Vehicle 2
Make

Model

Body Type            Sedan/Wagon etc

Engine Type          4/6/8 cylinder

Engine Capacity ltr                     Auto                               Auto
Transmission Auto/Manual                Manual                             Manual
Accessories/Options

eg. Air Conditioning, Tow Bar,




LEASE DETAILS
Lease Type                             Finance                               Operating
Lease Term/Klms                        Months:                               Annual Klms:
Location                               State:                                Garage Postcode:
Vehicle Accident in Last 2 years       Yes                                   No
Dealer Quote Obtained                  Yes (attach copy)                     No
Basis of Quote                         Fully Maintained
(Fully Maintained Lease                Maintenance                           Future Registration
Inclusions)                            Roadside Service                      Replacement Tyres
                                       Comp. Insurance                       Redundancy Cover      Y / N
                                       Fuel Provision

                                                           20           df17d109-da3d-4968-a45f-2f3075879422.doc
        Novated Lease Quotation Request Second Hand Vehicles
                                       FLEXITECH GROUP PTY LTD

FAX TO:           03 9882 6454 or email to vicaccountmgr@fleetaustralia.com.au
ATTN:             CUSTOMER SERVICE
DATE:

PERSONAL DETAILS
Full Name
Business Telephone                      B( )
Mobile Telephone                        M
Fax or E-Mail                           ( )
Are You Entitled to an                  Yes
Employer Provided Vehicle?              No
Employee / Contractor Number
EHICLE DETAILS
Make                                                            Build Date
                                                                (month & year)
Model & Rego Number                                             Next Rego Due Date
                                                                (Date, Month & Year)
Body Type (Sedan/Wagon)                                         State of Registration

Engine Capacity & Type                                          Odometer Reading
(eg. 3.8 ltr petrol)
Transmission (Auto/Manual)                                      Odometer reading Date

Color                                                           CFL Purchase Price
                                                                (Incl GST)
Accessories and options                                         GST Amount $
(e.g. air conditioning, tow bar etc)

Purchase via: Dealer                                            Is vehicle currently
              Private                                           registered in driver’s
              Financier                                         name.

Proposed Lease Start Date                                       Does Purchase Price
                                                                include Registration
                                                                Transfer Costs?
LEASE DETAILS
Lease Type                             Finance                             Operating
Lease Term/Klms                        Months:                             Annual Klms:
Location                               State:                              Garage Postcode:
Vehicle Accident in Last 2 years       Yes                                 No
Dealer Quote Obtained                  Yes (attach copy)                   No
Basis of Quote                         Fully Maintained
(Fully Maintained Lease                Maintenance                         Future Registration
Inclusions)                            Roadside Service                    Replacement Tyres
                                       Comp. Insurance                     Redundancy Cover      Y / N
                                       Fuel Provision

                                                           21         df17d109-da3d-4968-a45f-2f3075879422.doc
                          Statement of Personal Financial Position
This application is to be accurately and fully completed by the applicant
Vehicle Description                                                                                       Quote Number
PERSONAL DETAILS

Given Names                                          Surname                                               Date of Birth
Address                                                                                                    How long at this address?

Occupation                                           How long in current employment                        Ph:
Marital Status                                       Number of Dependents

Bank/Branch
STATEMENT OF ASSETS AND LIABILITIES
          Liabilities                                          $                               Assets                              $
Owing on house to -                                                           House / Deposit on house at -

Owing on other property to -                                                  Other property at -

Owing to bank                                                                 Aggregate balance of all bank accounts

Credit Cards (provide details)                                                Other investments (provide details)

Hire Purchase with -                                                          Motor Vehicle
                                                                              Registration Number
Other (provide details)                                                       Furniture

                           TOTAL LIABILITIES                                  Life Policy
                                                                              (Estimated surrender value)
                                                                              Other (provide details)

I am currently acting as Guarantor for financial                                                       TOTAL ASSETS
liabilities totalling $
For the following person(s):                                                               (LESS) TOTAL LIABILITIES

                                                                                                    SURPLUS / DEFICIT
MONTHLY COMMITMENTS AND INCOME (NEXT 12 MONTHS)
                 Commitments                                   $                               Income                              $
Credit Card / Store Account                                                   Salary (after tax)
Mortgage / Rental Payments                                                    Other wages & drawings
Taxes (excluding P.A.Y.E)
Rates                                                                         Rental Property Income
Insurance (car, house, life etc)                                              Family Allowance / Other pensions
Superannuation                                                                Other Income (provide details)
Hire Purchase / Lease payments
Other Loans                                                                          TOTAL ANTICIPATED INCOME
                                                                                     (LESS) TOTAL COMMITMENTS
                        TOTAL COMMITMENTS                                                         SURPLUS / DEFICIT
I declare, that the information given is in all respects a full and true statement of my present financial position, and my
anticipated income and outgoings for the next twelve months. I acknowledge that:
     Personal information is collected for the purpose of assessing my application for credit, and that failure to provide sufficient
      information may mean my application cannot proceed;
     Personal information may be disclosed to credit providers, who may in turn disclose the personal information to its related
      entities for prudential and administrative purposes;
     Credit checks may be carried out and personal information disclosed to a credit reporting agency, and they may access
      their personal information at any time.

Signature_______________________________________

                                                                   22                 df17d109-da3d-4968-a45f-2f3075879422.doc
                                Company Authorisation

Example / Draft
                                    Company Letterhead
Fleet Australia Pty Ltd
PO Box 3080
Auburn VIC 3123


Date

Novated Lease for XXXXX Manager
We certify that «FirstName» «Surname» is employed by «Company» in the capacity of «Title» and
has been employed by «Company» since                          . Their current gross annual
remuneration is $__________.


A specimen signature of                             appears below.




                          .
Specimen Signature


                          .
Witness Signature


                                .
Full name and Position of Witness




                                      .
Signed For And On Behalf Of XXXX


___________________________
(Signatory)

                                               23             df17d109-da3d-4968-a45f-2f3075879422.doc
                  For more information visit our website at:

                             www.fleetaustralia.com.au


                   Or contact our Customer Service Centre on:
                     EMAIL: vicaccountmgr@fleetaustralia.com.au

                                    PHONE: 03 9882 9899

                                      FAX: 03 9882 6454




Fleet Australia Pty Limited ABN 15 003 429 356 reserves the right to require leasing arrangements to
be made with CBFC Leasing Pty Limited ABN 89 008 520 965, or any subsidiary or Commonwealth
Bank Group entity, or an alternative financier.

The information provided in this Information Kit is copyright to Fleet Australia Pty Limited unless
otherwise stated. The views expressed are not necessarily those of Fleet Australia Pty Limited and
the company makes no claim to their accuracy. Information in this Kit may contain technical
inaccuracies or typographical errors. Information may be changed or updated without notice. Fleet
Australia Pty Limited accepts no responsibility for any loss occasioned to any person acting or
refraining from action as a result of material published in this Kit.

The information on taxation is of a general nature only and is based on the continuation of present
taxation laws, rulings and their interpretation. As individual circumstances differ, you should seek
assistance from your taxation advisor.

FAU958




                                                24              df17d109-da3d-4968-a45f-2f3075879422.doc