This is a three way agreement between the employee (lessor) the financier(lessor) and your employer. The employee leasing the vehicle in their own name

Variables to consider

  • The Vehicle and Cost
  • The Term
  • Residual

    Vehicles & Cost

    There are a number of guildlines when salary packaging vehicles

  • New or used upto 4 years old (vehicle to be no older than 8 years of age at the end of the lease)

  • Total vehicle cost upto $57,009 (above this figure there are luxury tax implication) some employer groups do not permit vehicles to be salary package when they exceed $57,009.

    The vehicle must be a "car " as defined by the ATO

     
  • motor cars, station wagons, panel vans and utilities - including four wheel drives (excluding panel vans and utilities designed to carry a load of one tonne or more)
  • all other goods carrying vehicles with a designed carrying capacity of less than one tonne
  • all other passenger carrying vehicles with a designed carrying capacity of fewer than nine occupants

    • The term of the lease is up to you however there are a number of ATO taxation guidelines you must follow

    Term Residual
    1 year
    (12 months)    		 65%
    2 years
    (24 months)    		 55%
    3 years
    (36 months)    		 45%
    4 years
    (48 months)    		 35%
    5 years
    (60 months)    		 25%

    Benifits of Packaging

    Generally the purpose of the Novation agreement is to allow employees to take advantage of tax savings through salary packaging

    Leasing a vehicle through a novated lease and salary packaging may be more benifical than a personal loan

    Fringe benefits tax (FBT) is payable on salary packaged vehicles however the amount of FBT will depend on the number of Kilometers you travel with the FBT years 1st April to 31st March

    Fringe Benifits Tax (Statatury Method)

    Statutory method of calculating FBT/Kilometers
    Kilometers Per Annum Statutory Percentage
    0 - 14,999 26%
    15,000 - 24,999 20%
    25,000 - 40,000 11%
    40,001 and over 7%

    Example
    FBT base value(Cost price of the vehicle excluding registration and purchase stamp duty) $30,000
    Distance travelled 20,000 km
    FBT Statutory Percentage 20%
    FBT Taxable Value $6,000
    Grossed up taxable value factor 2.1292
    FBT Liability = $6,000 x 2.1292 x .485 $6195.97

    Employee Contribution Method

    By making a post tax contribution equal to the taxable value of the motor vehicle FBT can be reduced to NIL

    We recommend you consult with a financial adviser to determine whether the Employee contribution method is you best option

    Example

    Gross Annual Salary $57,000
    Vehicle Price $30,000
    Estimated Kilometers Per annum 25,000
    Term 48 months
    Residual Amount $10,500 (35%)
    Annual Running Costs including Lease $5,000
    Lease Payments $10,000
    Employee Contribution Method $3,300 (11%)

     

     

     


      Without Packaging With Packaging
    Gross Salary $57,000 $57,000
    Motor Vehicle (pre tax)   $ 8,700
    Fringe Benefits Tax   0
    Gross Salary subject to income tax $57,000 $48.300
    Tax (including medicare) $14,727 $11,386
    Motor Vehicle (post tax) $12,000 $ 3,300
    Net Take Home Pay $30273 $33,614
    Benefit of Salary Packaging
    (per annum)    		 N/A $ 3,341

    Once you find a car, what next?

    Once you have decided on the vehicle you want to included in a salary package let us help you with the paperwork required to get you on the road

  • Finance application/approval - Approval within 48 hours
  • Lease agreements
  • Deed of Novation
  • Employer Documents
  • Salary Packaging paperwork

    Before entering into any salary packaging arrangement Banfield WA recommend you seek independent financial and taxation advice

    Finance Application Approval

    Banfield WA provide competitive finance though our negotiation with major lenders.

    Download the finance application and fax to us on (08) 9221 3434
    Finance Approval usually within 48 hours

    Lease Agreement/Novation Agreement

    Once Approval is obtained and the vehicle is ready to go lease agreements are prepared and along with the Novation agreement ready for your signing either at our office or documents can be forwarded to you overnight

    Vehicle Collection

    Once the documents are returned payment is made to the supplier of the vehicle with 1 working day and the vehicle is ready to be collected

    Employee Documents/Salary Packaging paperwork

    This is where through our networks with major employer groups such as the "Western Australian government" we can obtain all the necessary documents to have your salary package implemented within the shortest possible time.