In Novated
Lease Company the agreement is always between three parties, one is
employer, another employee and third is leasing company. It is very common in Australia for dealing
with vehicles. Novated leases performed
for motor vehicles conducted between employee and employer for the payment of
motor vehicle, paid by the employer from employee’s pre-tax income.
In UK it is usually applied for the Novated car lease conducted between two
parties. But in Australia it is
conducted for motor bikes and other vehicles also. Here three groups are there, employer,
employee and leasing company. All the
transaction is carried out from the employee’s pre-tax funds. Employee agrees for this through bond and all
connected transactions are made through this nominated account of employee. The agreement is known as deed of novation.
Australians usually like to have novated lease salary packaging due to
the advantages they get through this package.
Vehicles got through this package attract fringe benefit tax in
Australia. It is treated concessional here;
therefore it is one of way getting benefited by the tax.
It is an effective way saving tax by Novated leases, as it covered the
entire cost, depending upon the type of vehicle, distance traveled annually,
method of Fringe benefit tax used, fee, charges and all other taxes used by the
nominee.
It is extremely useful and beneficial
method for the all those people involved here in the scheme. It is beneficial for employee so that he can
same tax. It is beneficial for the
employer as it can save transport expenditure for the company. It is beneficial for the government as income
panel pay the fees. It is beneficial for
Novated Lease Company as they
collect fees and income is generated.
