Ed Stanistreet talks taxes, car leasing and how you can save Tax time is here. And with the start of a new financial year, now’s the perfect time to take out a novated lease on a new or used car through Toyota Fleet Management (TFM). Ed Stanistreet, General Manager at TFM, tells us why.
“Given that you’re going to be doing your tax return, now’s the time to think about the car you drive and how you can reduce your taxable income for the new financial year. Jump into a new car on a novated lease in July to make the most of a full tax year.”
Reducing your taxable income sounds great. But how exactly does having a novated lease make it happen? Let’s first take a look at what a novated lease is, then we can delve into its potential tax benefits.
What is a novated lease?
Novated leasing is the hassle-free way to get into the car you want and potentially save on income tax at the same time. Simply put, it’s a way of paying for a new or used car using pre-tax salary.
A financial arrangement is made with your employer where they pay your lease payments on your behalf from both your pre-and post-tax salary. Your repayments include all your car’s running costs, servicing and even your rego and CTP.
“If you secure a novated lease through Toyota Fleet Management, you can utilise our buying power and get a much bigger discount on the car, rather than just walking into a dealership”, explains Ed.
What are the tax benefits?
With a novated lease, your lease payments, running costs and Fringe Benefits Tax (FBT) are deducted from both your pre and post-tax income, effectively saving you the pre-tax deducted portion of your salary from income tax. And because you don’t pay GST on the vehicle, you can also save on the car’s purchase price and running costs.
By taking out a novated lease now, at the start of a new financial year, you’ll be maximising the amount of salary you could potentially save from income tax.
“The number one benefit is that it can be so tax effective – you’re paying a portion of your car and its running costs using pre-tax dollars,” Ed summarises.
How much will you save?
The savings you can enjoy through a novated lease will depend on a few factors. You can find out more from in the 2018 Novated Leasing Guide.
As you can see, a novated lease can offer advantages all round. It can be both cost and tax effective, meaning more cash in your hand. Plus, you’ll benefit from the convenience and flexibility this type of lease offers.
