Page 3 Components of a Novated Lease Purchasing of the vehicle Lease rental Vehicle maintenance and repairs Comprehensive insurance Fuel Tyres Registration & CTP Other Provisions Auto Club membership FBT liability (reporting)
Page 4 The ATO Guidelines – Residual Values 12 months65.63% 24 months56.25% 36 months46.88% 48 months37.50% Option to use LeasePlan estimated lease end market value when considered less than minimum ATO guidelines
Page 5 Employee support services National Novation Centre (specialist LeasePlan in-house department) Novated User Guide LeasePlan Online – Internet Novated Solution Monthly Vehicle Report – including FBT LeasePlan monitoring of usage and cost performance 24 hour 7 day a week maintenance support End of lease support Early termination support (leaving employment)
Page 7 The benefits of a Novated Lease Choice of vehicles- includes secondhand cars* Major savings on the vehicle purchase price Minimise GST/ Pre-tax savings on lease & operating costs Residual Value helps build equity in vehicle Opportunity of a tax free benefit at end of lease Major savings on operating costs through fleet management controls Optional Involuntary Redundancy Insurance * Conditions apply
Page 9 Fringe Benefits Tax (FBT) Fringe Benefit Tax (FBT) is an employer levied tax which you contribute to via a salary deduction. The calculation is based on annual kilometres travelled between 1 April and 31 March. The estimated FBT liability calculation from your quote is based on your nominated kilometres. Your monthly report will assist you in monitoring your FBT liability by tracking your actual usage. FBT is based on actual kilometres which are calculated at the end of the FBT year (31 March). Annualised kilometres.
Page 10 Calculating FBT Liability The Statutory method is based on actual distance travelled per FBT year for the of calculation of FBT 0 -14999 k per annum26% 15000 - 2499920% 25000 - 4000011% 40001 +7%
Page 11 Fringe Benefits Tax (FBT) What happens if you do not make your kilometres? Based on an FBT Base Value of $33,375.10… FBT Base ValueAnnual KmsStatutory FractionFBT Liability $33,375.1012,00026%$8,331.17 $33,375.1015,00020%$6,408.59 $33,375.1025,00011%$3,524.72 $33,375.1040,0017%$2,243.01 It is therefore important to be realistic about your budgeted kilometres, otherwise you may incur additional costs to your package.
Page 13 What is ECM? ECM is where the employees make post-tax contributions towards the cost of operating the vehicle Legitimate way of reducing FBT liability The post-tax contribution reduces or eliminates the FBT Can lower the overall cost of packaging a vehicle Makes salary packaging more attractive to all employees who earn up to $180,000 per year
Page 14 How ECM is calculated? Vehicle FBT Base $30,000, 25000 km, Full Year What ECM is needed to make the FBT liability NIL? Calculate FBT Taxable Value? FBT Taxable Value = FBT Base value x Stat Rate FBT Taxable value =($30,000 x.11 ) Therefore FBT Taxable Value = $3300 Employee Contribution needs to be $3300.
Page 15 ECM Benefits - Example Based On a vehicle lease over 36 months & travelling 15,000 kms per annum. Post tax contribution ECM required to offset FBT Vehicle Lease Costs & GST (no FBT) Vehicle Lease Costs & FBT
Page 17 What to expect during your lease Drivers kit and fuel card upon delivery. – Drivers MUST provide accurate odometer readings at each fill. Servicing vehicle. Monthly vehicle report. FBT Declaration to be completed at the end of each FBT year. Recalculation for distance variance/and or operating costs.
Page 18 Monthly Reporting Statements review all aspects of the vehicle budgets including FBT tracking recalculation of their package to address variations reports emailed monthly directly to novated drivers
Page 20 Lease Payment Protection Insurance (Optional) Involuntary Early Termination One off premium payment amortised into the lease, shown separately on the lease quote (currently $650) Claimable if employee has suffered; Involuntary redundancy Permanent disability due to injury Death
Page 21 Lease Payment Protection Insurance (Optional) Involuntary Early Termination The following monthly payment is to be made by the employee, and then the following three monthly lease payments can be claimed The vehicle can be renovated to another employer or returned If returned, LeasePlan can make a claim on the insurer, if the net sales proceeds are less than the lease payout figure The maximum claim is $25,000
Page 22 Early Termination (Options) - Voluntary The novation agreement immediately expires, if or when, employee terminates employment There are 3 options available: 1) Payout the vehicle as at the end date of employment 2) Continue the lease by paying lease payments directly to LeasePlan 3) Enter into a new novation arrangement with new employer* * Please note: conditions and processes apply
Page 23 Options at Lease End LeasePlan will advise you approx 3 months prior to end date of options: Extend lease for further period Offer to purchase at residual value plus GST Utilise LeasePlan for new novated lease vehicle Operating costs will be reconciled as soon as practicable (approx 7 days). This reconciliation will occur as an adjustment through payroll via SaryPlan
Page 25 Online Information for Employees LP Website www.leaseplan.com.auwww.leaseplan.com.au Drivers Online Supplier Finder - nearest LeasePlan preferred dealer location - nearest fuel outlet location Showroom> for new models Car news & reviews> linked to Go Auto with tests & information on all makes and models http://www.newcastle.edu.au/service/salary-packaging/
Page 26 LeasePlan Contact Details LeasePlan National Novation Centre Ph: 1300 668 572 firstname.lastname@example.org www.leaseplan.com.au The University of Newcastle Customer Number - 1000157071
Page 27 Thank you for your attention Any Questions