Interprac Fleet

A client chooses a novated lease because it is a tax-effective method of financing a vehicle. It allows an employee tax benefits that regular car finance cannot achieve.

A Novated Lease is a three way agreement between an employee, an employer and a finance provider. Through a novated agreement, your employer is obligated to make your monthly lease payments whilst you are employed by them. The lease payments are then deducted from your pre-tax salary. A vehicle is a concessional fringe benefit for the employer, you get to save 1000's of dollars in tax over the life of the car.

In order for a novated lease to be set up, two agreements need to be put in place. The first is a finance lease between the Employee and financier taken out in the Employee’s name this is the car loan component of the lease. The second is a novation agreement which is entered into by the financier, Employee and Employer to initiate the lease. This enables the lease costs to be invoiced to the Employer and deducted tax effectively from the Employee's salary.

The lease costs are worked out over the duration of the lease and divided into equal monthly payments. These payments are recovered by the Employer from the Employee's salary.

InterPrac take care of all the associated paperwork and provide a detailed Payroll Advice detailing the payroll deductions specific to each lease.

• Tyres
• Maintenance
• Comprehensive Insurance
• Car Finance
• Fuel
• Vehicle Registration
• Compulsory Third Party (CTP) Insurance
• Australia-Wide Road-side Assistance

Your Employee's lease is fully portable, so if they leave, the lease stays with them.

Ensure that their final pay is held until the running cost budget reconciliation is received, as there may be a deficit to recover from their final pay.

If a significant variance is forming in the budgeted running costs the Employee will be asked to recalculate their lease to modify the deficiency. A revised Payroll Advice is issued to begin deductions at the modified lease rental.

Your lease is fully portable, so if you change employers your lease can go with you. With your future employers permission, a new novated agreement can be put in place that transfers the lease and the tax advantage for you.

The resale qualities of a vehicle are quite important when considering which vehicle to get. As you may be aware, some vehicles hold their value much better than others. So much so that vehicles with similar new car prices can vary in resale value amounting in thousands of dollars difference over the term of your lease. Differences such as the above are relatively common so it literally pays to be smart when selecting your vehicle.

Your Consultant is knowledgeable in vehicle resale values so do not hesitate to discuss this with them.

A reconciliation of the running costs is performed at the end of the lease or when you leave your employer. Any unspent budgets are credited back to you as though you never budgeted for them in the first place.

If there is a major variance a lease recalculation may need to be performed to modify the deficiency. If a deficit exists at the end of the lease, you will be billed this money via payroll. Any deficit is able to be deducted with the same tax effectiveness applicable to the lease. If a surplus exists you will simply be repaid this money less any PAYG taxes.

This depends on the flexibility of your insurance policy.

You certainly can. You can have Novated Leases for family members.

You have three options:

1. Upgrade your vehicle — An Employee can upgrade your vehicle, trading in or selling privately your existing vehicle, keeping the profits.
2. Extend your existing lease — An Employee can extend your existing lease which reduces the after tax cost to you in the vast majority of cases.
3. Purchase the vehicle — An Employee can purchase the vehicle outright for the residual value

You will be provided with a fuel card which can be used in any service station to purchase fuel only. Vehicles serviced at authorised dealers will invoice us directly for service work carried out. If however, you incur a car running cost not able to be paid via our services, it can be reimbursed from your running cost budgets. You will need to obtain a tax invoice and submit along with the reimbursement request form. For purchases other than fuel make sure your registration number is noted on the invoice and that you provide proof of payment.

1. Possible loss on disposal if residual value is not set at correct level.
2. Benefits, which exist under current tax law, could change under the policy of the Government if the day or via future tax rulings.
3. The vehicle expenses may be more than was originally estimated.
4. Over-estimating travel kilometres may result in increased FBT liability.

The vast majority of vehicles are eligible for a lease. Vehicles cannot be older than ten years at lease end or have projected kilometres greater than 250,000 over the life of the vehicle.

You can lease a new or used car. The vehicle can be from a dealership, private sale and/or you can even use your existing vehicle. It doesn’t matter whether you own it outright or have finance outstanding on the vehicle you can still lease it, by way of sale & leaseback or re-finance.

Yes you can. The vehicle must be deemed a car as determined by the Australian Taxation Office. You must also check with your employer if there are any restrictions on the vehicle, i.e. a convertible vehicle may not be suitable for an employee who is often required to carry office equipment.

If you wish to trade-in your current vehicle to lease a new vehicle, you must advise us of the proposed arrangements. The purchase of the new vehicle and the trade-in must be treated as separate transactions with the proceeds of any surplus on the trade-in paid by the dealer to you. The new vehicle will be wholly financed by the financier. Although you are financing the full value of the new vehicle, you are receiving tax advantages on the additional amount.

FBT is a business based tax required to be paid by the employer charged on the fringe benefits provided by them. Packaging a motor vehicle is a fringe benefit, whereby lease payments are paid by the employer and recovered from your pre-tax income. In effect a large portion of your salary is not subject to income tax. As your employer is required to pay FBT, this is generally recovered from the employee with additional pre-tax deductions. The lease works in harmony with fringe benefit and income tax legislation maximising the tax advantage you receive while minimising the administrative impact for your employer.