Get on the road with a Novated Lease
NOVATED MOTOR VEHICLE LEASES
(ATO REFERENCE: IT2509)
A novated lease is a tri-partied financial arrangement between the employee (as the lessee), financier (as the lessor) and the employer. The following diagram outlines the process associated with including a novated lease as part of your salary package:
Figure 1: Associated motor vehicle lease
DEFINITION
WHAT IS A NOVATED LEASE?
In a novated lease agreement, the fleet manager leases a vehicle to the employee and novates the responsibility to pay for the lease to the employer. During the lease term, the employee will have full and unrestricted use of the vehicle. In the event of an employee termination of (resignation, redundancy or other termination), the novation agreement expires and full accountability reverts to the employee. The vehicle remains the responsibility of the employee. The transfer of arrangements from one employer to another is a simple transaction for the employer and employee.
RELATIONSHIP MANAGEMENT
- An employee’s requirements will be discussed with the fleet manager to ensure the right vehicle is quoted and the price is sourced
- The fleet manager can source the vehicle and accommodate any existing relationships employees may have with vehicle dealerships
- We can offer a finance lease or an operating lease option for new and some used vehicles
- After the package is accepted, the vehicle will be delivered to an agreed location
- All other inclusions to the package will be based on the nominated kilometres
- Reports showing utilisation of the budget and fringe benefits will be available on a regular basis
- The package can be changed anytime within the lease to ensure that it meets the vehicle operating costs
- Three months before the lease ends the driver will be advised to ensure smooth changeover of the vehicle.
FULLY MAINTAINED LEASES
Besides the financial component on the lease, employees can have the opportunity to benefit from a fully maintained lease where the monthly lease payment also covers all running costs of the vehicle, including:
- Fuel (petrol card)
- Registration
- Insurance
- Maintenance
- Roadside assistance
Advantages of a fully maintained lease include:
- Normally non-deductible motor vehicle operating costs become a pre-tax deduction
- Allocating a fixed monthly payment for motor vehicle expenses that protects the cash flow of the employee
- Eliminating out-of-pocket expenses of operating the vehicle for the term of the lease.
Figure 2: Novated lease process
FUEL CARDS
You will receive both Ampol and BP Fuel Cards as part of your lease. Alliance Fleet have ordered your fuel cards and these will be delivered to you in the next 7-10 days. In the meantime, keep your fuel dockets (Tax Invoice) and you can lodge them for reimbursement in due course in terms of above.
REPAIRS, MAINTENANCE & TYRES
When your new car is due for a service or needs new tyres, simply book it in with the Dealership or one of our Approved Tyre & Mechanical Partners. Approval and Payment will be arranged by Alliance Fleet and you can relax….just pick up your car when it is ready!
REGISTRATION & INSURANCE
When you receive your Registration and Insurance Policy renewals, simply email them to: email@alliancefleet.com.au
and the Fleet Team will pay these on your behalf!
EXPENSE REIMBURSEMENTS
If you have any “out-of-pocket” expenses in relation to your lease, these can be reimbursed to you directly from your fleet account. For Example:
- If you pay your Insurance or Registration directly: Send through the Tax Invoice and Receipt for payment and these funds will be paid back to you;
- The same applies to expenditure on Fuel, Servicing or Tyres etc.,
Simply email the receipts to: email@alliancefleet.com.au and the Fleet Team will reimburse you the costs!
Important Information
OPERATING BUDGETS
The operating budgets set in your Novated Lease are generally quite conservative. This is to ensure that you are never left short in your account should an emergency arise.
Therefore, it is likely that a small surplus will build in your account. Remember that this money is yours and will be returned to you at the end of the Lease period.
END OF LEASE
At the end of the Lease term you have a number of options:
- Get a New Car
- Pay-out the Residual and own the car outright
- Pay-out the Residual and sell the car (this could be a tax free profit for you!)
- Refinance the Residual and continue with the Lease.
We are here to Help!
LEAVING EMPLOYMENT
If you leave your current employer, it is important to know what your options are:
- Remember that the car belongs to you, not your employer. It is your responsibility, drive it home. The Payment of the Finance remains your responsibility!
- If you are changing employers: Most Companies will allow you to continue with your lease. Contact Trinitas or Alliance Fleet and we will sort the paperwork for you and your new employer.
BE SURE TO CONTACT US AHEAD OF TIME SO WE CAN ADVISE YOU ACCORDINGLY!