In a recent episode of the Fleet News Group podcast, Marc Sibbald, editor of Fleet News Group, engaged in an insightful discussion with Frank Agostino, CEO of Paywise. The conversation centered around the growing interest in novated leasing and salary packaging, particularly in light of the recent Fringe Benefits Tax (FBT) exemption for electric vehicles (EVs). This article summarises their discussion, highlighting the key benefits and operational efficiencies of novated leasing and salary packaging, tailored for HR managers, CEOs, and CFOs.
The surge in novated leasing interest
The introduction of the FBT exemption for EVs has significantly boosted the attractiveness of novated leasing. This policy not only promotes environmentally friendly vehicle adoption but also offers substantial financial benefits to employees. Agostino noted that this exemption has made novated leasing more accessible to a broader audience, creating considerable buzz in both industry circles and mainstream media.
Gradual uptake and growing awareness
Despite the policy being announced some time ago, its uptake was initially slow as individuals took time to understand the benefits. However, over the past 12 to 18 months, there has been a steady increase in interest and inquiries. Agostino emphasised that this prolonged exposure has led to a wider recognition of the potential savings and advantages associated with novated leasing, even for internal combustion engine (ICE) vehicles.
Benefits for employers and employees
One of the key advantages of novated leasing is that it provides a cost-effective employee benefit that does not increase payroll costs. With minimal effort required from employers, companies can offer this benefit to attract and retain talent. Paywise has advanced systems and processes in place to make the implementation of novated leasing seamless for employers, thereby enhancing employee satisfaction without additional administrative burdens.
Positive customer experiences with EVs
Agostino shared positive feedback from customers who have transitioned to EVs through novated leasing. Many customers, initially skeptical, have come to appreciate the cost savings on fuel and maintenance, as well as the positive environmental impact. Paywise supports this transition by offering loan cars, allowing potential lessees to experience EVs firsthand. This hands-on approach helps dispel common myths about EVs, such as charging inconveniences and range anxiety, proving the practicality and benefits of EV ownership.
The comprehensive scope of salary packaging
Salary packaging at Paywise extends beyond vehicles, encompassing a wide range of items including laptops, additional superannuation contributions, remote area benefits, and work-related expenses. This flexibility is particularly advantageous for sectors such as healthcare, education, and not-for-profit organisations, which can leverage specific FBT exemptions and caps to enhance employee benefits.
Broad applicability across Industries
Agostino highlighted that businesses of all sizes and across various industries can benefit from offering novated leasing. While sectors with larger workforces and higher salary earners, such as healthcare, education, and government, see the most significant uptake, the benefits of salary packaging are universally applicable. This makes it an attractive option for any organisation looking to enhance its employee remuneration package.
Quantifiable savings
A significant selling point of novated leasing is the quantifiable savings it offers. By using pre-tax salary to pay for vehicle-related expenses, employees can reduce their taxable income and increase their take-home pay. Agostino explained that savings can be substantial, especially considering the GST savings on both the purchase price and running costs of the vehicle. For instance, employees could save up to 40 cents per litre on fuel alone, a compelling benefit in today’s economic climate.
Popular novated lease vehicles in 2024
The podcast also touched on the popular vehicles for novated leasing in 2024. The top choices include the Tesla Model 3, Tesla Model Y, BYD Atto 3, Ford Ranger, and Mitsubishi Outlander PHEV. The shift towards EVs is evident, driven by the FBT exemption and growing environmental awareness.
Paywise’s commitment to Corporate Social Responsibility (CSR)
Beyond its business operations, Paywise is committed to giving back to the community. Agostino shared their involvement with the Edmund Rice Foundation, supporting educational initiatives for children with disabilities in Nairobi, Kenya. Paywise incentivises its staff to participate in these initiatives, reflecting the company’s dedication to social responsibility.
The podcast underscores the numerous benefits of novated leasing and salary packaging for both employers and employees. The financial advantages, combined with the ease of implementation and positive environmental impact, make novated leasing an attractive option for businesses looking to enhance their employee benefits.
