Novated Leasing Myths

When it comes to the potential benefits of novated leasing, there are a lot of myths out there. For those people whose employers offer novated leasing, we dispel some of the most common misconceptions – one by one!
FALSE! You could benefit with a novated lease – no matter how little you drive.
Consider this example: Frank leases a car worth $34,000 on a four-year lease term. As he works close to home he only drives his car around 15,000 kilometres each year. Based on his $80,000 annual salary Frank could receive a fortnightly saving of $115 – or $2,994 each year. That’s an estimated benefit of up to $14,970 for the term of the lease.*
Imagine what you could do with an extra $14,970!
These potential tax savings are only possible if you enter into a novated leasing arrangement.
FALSE! You can enjoy the same potential tax savings and budget convenience on a used car or even your existing car.
You can choose any second-hand make or model you prefer (subject to your employer’s policy), provided it meets the age requirements. It is subject to eligibility criteria and you can find that out by speaking with the Maxxia team.
If you’d prefer to hold on to your current car but keen to explore the benefits of novated leasing? Good news: you could still enjoy the convenience of a novated lease. Basically, if you own your car, or still have it on finance, you could choose to sell your car to one of our financiers and then lease it back. This type of lease gives you all the benefits of a regular novated lease while allowing you to free up any equity you have in the car to spend on other things, such as renovations or a holiday.
FALSE! You don’t have to earn a high salary, or work in management to enjoy the potential benefits of a novated lease. Regardless of how much you earn, if you pay tax, you could benefit from a novated lease.
Note: When you apply for your lease, the financier will assess your application based on your financial circumstances before you make any commitment. One of our dedicated leasing consultants can help explain how this could apply to your circumstances.
Consider this example: John’s annual salary is $50,000. He leases a car valued at $34,000 on a five-year term. He pays for his car and its running costs with a combination of his pre-tax and post-tax salary through a novated lease, rather than a personal loan.
By salary packaging his car through a novated lease, John could save $105 each fortnight or $2,726 each year. When you add this up, John could save up to $13,630 in five years!*
That’s a big potential tax saving that he could put towards his household bills – or even a well-deserved holiday.
FALSE! A novated lease offers you what an ordinary loan doesn't – the complete package.
Let's recap the potential benefits of a novated lease.
Alternatively, if you were to finance your car through a personal loan or your home loan:
FALSE! If you leave your employer, you can take the car with you and remain responsible for its payments. If your next employer doesn’t offer novated leasing, you can take over the finance using post-tax repayments and continue using the vehicle.
FALSE! The car can actually be 100% for personal use, and you can still enjoy the potential tax benefits.
Our experienced team can guide you through the application process, answer your questions and provide you with a no-obligation quote.
Complete the form below or phone us on 1300 123 123.
You can find answers to commonly asked questions at maxxia.com/faq
*Assumptions: The estimated potential tax benefits referred to in both of the examples above are exclusive of GST and based on the assumption that you would have paid for the lease from your post-tax salary (as opposed to salary packaging those payments from your pre-tax salary or a combination of your pre and post-tax salary). Payments include car payments, fuel, registration, tyres, insurance and scheduled servicing. The estimated annual benefits will vary depending upon salary, employment circumstances, selected benefits and applicable tax treatment. The estimated annual operating costs includes estimates of fuel, maintenance, tyres, registration, comprehensive insurance and fleet management fee and are exclusive of GST. GST of 1/11th is payable on your Employee Contribution Method (ECM) contributions. The benefit of Input Tax Credits may be passed onto you by your employer. State Stamp Duty rates apply. PAYG tax rates effective 1 July 2021 have been used.
Things you need to know: This general information doesn’t take your personal circumstances into account. Please consider whether this information is right for you before making a decision and seek professional independent tax or financial advice. Conditions and fees apply, along with credit assessment criteria for lease and loan products. The availability of benefits is subject to your employer’s approval. Maxxia may receive commissions in connection with its services.
Maxxia Pty Ltd | ABN 39 082 449 036