Novated leases are a very popular way for employers to reward their best staff members. While it’s not compulsory for employers to offer workers a novated lease as part of their salary package, it is increasingly becoming a popular option due to the benefits for each party. As such, it’s an option you might want to consider. But when is it a smart option for you to offer this sort of deal?
It’s time to ask yourself a few questions to help you make this decision.
- Is he/she a worker who deserves some sort of reward? If stands to reason that if your employee is doing a good job, then a reward seems fitting. On the other hand, an underperforming worker might not merit a novated lease, particularly if it then alienates other employees.
- Have you spent a lot of time training this employee and/or do you feel that you’d be lost without him/her? Setting up a novated lease encourages employees to stay with you rather than transfer to another job. They won’t just stay because you’ve been nice; they’ll also hang around so their car repayments will be taken out of their pay packet before tax rather than afterwards.
- Does your employee do a moderate amount of work-related travel? You may or may not encourage use of the logbook system when setting up a novated lease with your employee. However, if your employee does loads and loads of work-related trips, he or she will probably not benefit all that much from a novated lease and may not consider it to be much of a reward. You may want to consider leasing a company car that they use for work purposes only, although this will depend on the size of your business and the nature of your work.
- Do you have a fairly tight budget? Novated leases are a real boon to not-for-profit organisations or businesses with tight margins, as there’s no overhead cost to the business. You may not be able to give your employees a raise to reward them if the funds aren’t there but you can set up a novated lease for them instead.
- Do you want your employees to do some work-related driving but want to save hassles and paperwork regarding assets and liabilities? A car financed through a novated lease scheme doesn’t count as an asset or a liability for you and your company, meaning that you can leave these vehicles off the balance sheet.
- Do you want to claim an extra input tax credit? Every little tax credit helps! You get to claim an input tax credit on any GST paid as part of a novated lease
- Choosing a car. Most will opt for a brand new car, however, a wide variety of models are eligible as part of a novated lease
The Fincar team is here to help you with all your financing needs. Contact us today to help arrange your next car or equipment loan.