Business is facing a multi-tiered challenge when it comes to attracting and retaining talent. The competition for great people is stronger than ever, and yet the costs of attracting the best talent through offering higher remuneration or costly perks are out of reach for many. With high inflation and a possible looming recession, most businesses are trying to remain as cost conscious as possible.
The great news is that there is a low-cost, high-value option available to engage and reward talent: car novation and Keeping Co can do it all for you and your employees for FREE for our clients!
How does it work?
Through a novated lease, an employees’ car lease and running costs become a part of their salary package. Thanks to a combination of pre-tax and post-tax salary deductions, the arrangement costs you – the employer – nothing, while costing the employee much less than a usual car loan.
The employee can lease any car they choose – new, used or even their current car – saving money on the purchase price and running costs of the car.
The repayments for the novated lease and all car running costs such as fuel, servicing, tyres, insurance and registration are deducted from the employee’s salary each pay cycle.
This becomes a powerful incentive to work with you as getting access to a car at a lower cost is an attractive benefit.
What are the benefits of car novation for the employee?
- Choice. Your employee can choose a new, used or their current car.
- Convenience. By rolling all car costs into one regular payment, it’s a far more convenient option which gives the employee greater budgetary control.
- Ownership. The employee owns the car and can use it for personal or business use. If they move jobs they can move the lease to a new employer.
- Lower costs. The arrangement is a cost-effective way for employees to own a car. Not only are there significant tax advantages, but providers will often be able to access fleet discounts, reducing the cost of a car purchase (this is the case for our partner beCarWise).
- Tax advantages. Employees pay less tax overall. They won’t pay GST on the purchase price of a car, and will be eligible for significant GST and income tax savings. In the event that the employee sells the car for more than the amount owing, they can make a tax-free profit.
- Discounts. Employees will receive discounts on servicing, repairs and maintenance, tyres and batteries (our partner BeCarWise offers up to 35% off).
- Enviromentally friendly. If you buy an approved electric vehicle under the LCT limit you won’t pay FBT!
What are the benefits of car novation for the employer?
- Attract and retain employees. Enough said.
- No time. We can arrange all the necessary services for you.
- No cost. The costs come out of the employees’ salary package, meaning there is no cost to you.
- No FBT. If the employee buys an approved electric vehicle under the LCT limit.
- Tax advantages. With the car factored into the salary package, it reduces the amount of payroll tax and workers compensation you will have to pay, without FBT implications.
- No admin burden. Everything is handled by the provider and there’s no need to adjust the payroll cycle.
Looking to introduce car novation as an employee benefit? We can help. Keeping Company now offers car novation services via our partner beCarWise. Contact us today to find out more.
At Keeping Company, we’re not just accountants, we’re business people too. With our counsel, your business can reach its full potential.
We have a team of experts; Cloud Accountants, Business Advisors, Finance Specialists working together and ready to help, contact us today.
For all media enquires please contact Tracy Miller, CMO, Keeping Company 0414 898 452.
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.