How to Calculate the Cost of a Novated Lease

If you’re considering getting a new car on a lease, you can calculate how much it will cost using our novated lease calculator. It’s easy and will help you make the right decision.

In getting started, you need to provide the product value (or the retail price) of the asset you’re interested in leasing, as well as your down payment and interest rate. Next, you’ll need to estimate the residual value and term of the lease.

Salary Packaging

Salary packaging is a popular way to make employee business incentives, but it can be complex. It is particularly true when it comes to cars and other vehicle expenses.

Many employers outsource the salary packaging process, which involves managing payroll deductions, GST claims, FBT reporting and vehicle expense payments. It reduces the administrative burden on the employer and helps to minimise FBT liabilities for the employee.

Some salary packaging companies offer a novated lease service, and some do not, but all provide a service to the employer. The service includes sourcing vehicles, arranging finance, insurance, servicing and more. It also manages novation, GST and FBT accounting for the employer and employee, budgeting and paying running costs.

The salary package company then deducts an agreed amount from each employee’s pre-tax wage to cover the lease repayments and other vehicle expenses, including fuel, insurance, maintenance and tyres. It allows the employee to claim the cost of these vehicle expenses as a tax deduction on their income tax return, saving them money in the long run.

Tax Savings

If you want a new, used or demo car, you could save thousands in upfront costs and tax with a calculated lease. This type of lease financing is a popular way to reduce the cost of buying a vehicle and can often work out cheaper than cash, car loans or mortgage finance.

Using your salary as a repayment for a novated lease will lower your taxable income and help you save on running costs, including fuel, insurance, registration and servicing. It can be a significant tax benefit in many cases, especially for employees on higher incomes or paying more tax than others.

Because the payments are made from a combination of your pre-tax and post-tax salary, you can claim these expenses as part of your tax return. The amount you can deduct depends on your income tax bracket.

With a calculate novated lease, you can estimate your annual vehicle running costs and then deduct these from your pay over the life of the lease. It will include all your car finance and running costs, like fuel, service, insurance and tyres.

Once you have estimated your total cost, you can compare your budget with different vehicles. You must know your annual kilometres drove and the corresponding tax rate to do this. Then you can compare the yearly costs to see how much you can save with a calculated lease.

Another advantage of a calculate novated lease is that it doesn’t attract GST on the purchase price or repayments. It can be a considerable saving compared to purchasing the vehicle outright and making it more convenient.

You can also make a tax-free profit on the residual value at the end of your novated lease. It can be a great way to maximise your money if you make sensible choices and care for it.

Flexibility

Flexibility is one of the most appealing aspects of calculate novated lease. Since a novated lease only lasts a few years, it allows you to make changes in your life, such as starting a family or moving to a different location for work, without worrying about how you will finance it.

Another factor to consider is the mileage limit. It will determine how many miles you can put on your car before the end of the lease. It’s crucial to select a mileage limit that you can comfortably live within, even if your life changes significantly in the future.

A novated lease also uses Salary Packaging, which allows you to receive a portion of your income as a tax-free benefit. It will give you a more stable source of income, which can help you plan for long-term financial commitments, such as home loans.

A calculated novated lease can incentivise employees to join your company or stay with you if you’re a business owner. It’s also a great way to attract new talent.

A novated lease is a three-way agreement between you, your employee and Endeavour Fleet. The employer makes the payments under the lease, and you get to claim them back as a tax-free benefit.

Convenience

A novated lease is convenient because it means you can combine your car lease payment with the cost of your car’s running costs into one regular price. It can save you time, effort and money in the long run and even reduce your tax burden!

Getting a novated lease is easy and quick. Just choose a vehicle, then enter your gross salary and other details into the calculated lease calculator to get a full breakdown of all costs.

Then your employer will deduct the monthly payment and remit it to Toyota Fleet Management. This payment covers your car’s running costs, including petrol, charging (if it is an electric vehicle), insurance, rego and servicing.

Different types of novated lease deals are available, depending on your requirements. They can be based on any vehicle, with many of them including a residual payout at the end of the term.

Another great feature of a novated lease is that it provides you with significant income tax and GST savings. So as well as saving you from paying your lease payments out of your pre-tax earnings, it can reduce your tax bill and help you make more money with your income.

Taking advantage of a novated lease can be bright for many Australian employees. It can offer significant savings on the purchase price of your car, along with running costs such as fuel, maintenance and tyres. Combined with the convenience of a single payment, a novated lease can be an attractive option for many Australians.