ADF Salary Sacrifice Car: Vehicle Salary Sacrifice

Car salary sacrifice is an attractive employee benefit that allows employees to lease a car through a specialist leasing company with fixed insurance, maintenance and running costs. The lease payments are deducted from an employee’s pre-tax salary, reducing their taxable income and overall tax bill. For more information about the ADF salary sacrifice car, click here.

Other popular items for salary packaging include meal entertainment expenses and credit card fees, home loans and mortgage repayments, childcare expenses and self-education or membership dues/subscriptions.

Tax Savings

Car salary sacrifice is a popular way for employees to pay for their vehicles. The lease payments are deducted from pre-tax wages, reducing an employee’s taxable income and GST bill. Car package arrangements can also include fixed insurance and maintenance costs.

Similarly, meal entertainment and credit card expenses can be salary packaged through a novated lease, offering significant tax benefits for Defence employees. However, seeking professional financial advice before committing to any salary packaging arrangement is essential.

A novated lease is a three-way agreement between an employer, employee, and specialist leasing provider. The employee chooses a new or used car to purchase and maintain, and the employer makes regular lease repayments to the finance company from pre-tax wages. The lease also includes running costs such as fuel, servicing, and replacement tyres. As well as these benefits for the employee, the novated lease can benefit employers because it helps reduce staff turnover and Fringe Benefits Tax.

Getting Started

Salary sacrifice arrangements are a standard benefit for employees, especially ADF employees. These agreements allow you to pay for a car via a novated lease using pre-tax salary payments. This reduces your taxable income and, in turn, will enable you to save on taxes. For more information about the ADF salary sacrifice car, click here.

A novated lease is a three-way agreement between you, your employer and a specialist leasing provider. The leasing company handles lease payments, fixed insurance, maintenance and running costs. This can help you avoid paying GST on the initial purchase price and vehicle running expenses, including fuel, servicing, regular renewals, tyres, and replacements.

Novated leases are also FBT-exempt and can be transferred with you if you change employment. However, you should seek financial advice before entering any salary sacrifice arrangement. These arrangements can impact superannuation entitlements and may affect your government benefits. It is essential to seek professional advice to ensure the benefits outweigh potential tax implications.

Managing Your Lease

Unlike car loans, novated lease payments are made from an employee’s pre-tax salary. This reduces their income tax liability and provides GST savings on both the vehicle purchase price and running costs. This includes fuel, servicing, tyres and registration fees.

As the leasing company manages all aspects of novated leases, there are fewer administrative costs for employees and employers. Moreover, a specialist novated lease provider can track how the car is being driven and the mileage to help prevent excessive fuel payments.

However, a novated lease is not suitable for everyone. Employees and their employers must understand the benefits and considerations before agreeing. They must also consider any impact a novated lease may have on other government entitlements like child support or family tax benefits. The lease arrangement is typically for 2 to 5 years; at the end, employees can return the car, purchase it, or refinance it. For more information about the ADF salary sacrifice car, click here.

Deciding on a Vehicle

A car is often one of the most significant purchases an individual will make, and a salary sacrifice arrangement can offer substantial savings over buying or leasing without sacrificing income tax or GST. It’s worth seeking tax advice to ensure the car salary sacrifice scheme suits your circumstances.

Novated leasing is a three-way agreement between you, your employer and the finance company that operates the novated lease. Your employer uses pre-tax salary payments to cover the regular lease repayments and car running costs (including GST). At the end of the lease term, you can make a residual payment and take ownership of the vehicle or upgrade with a new, novated lease.