You may have heard about novated leases, but do you know exactly what a novated lease is and if it could help you financially?
In official speak, a novation is a tri-party arrangement whereby the three parties (lessor, lessee and employer) agree to change or transfer all or some of the rights and obligations in a motor vehicle lease entered into between two of the parties.
Simplified, a novated lease allows you to gain finance for a new car, and pay it back via salary sacrifice, where a portion of the repayments and operating costs are paid from your gross wage, reducing your taxable income, which saves you money!
The novation agreement is, as stated above, an agreement between you, the lease company and your employer, which, when you are a contractor, is generally your payroll management company.
In today’s on-the-move society, there are many times in life where we need a new car. This could be the pending arrival of a new baby, a change in hobby (4-wheel driving, anyone?) or a change of home (are garages getting smaller in the city?). Unfortunately, we can’t always afford a new car outright when we need one. In this case, a novated lease can be a great option.
In other cases, you might be thinking about a new car, and by purchasing the car through a novated lease, you can reduce your taxable income at the same time.
Whatever the situation, it’s important to speak with your payroll service or payroll management company about just how a novated lease can help you as a contractor and ensure you tick all the boxes when purchasing and leasing to ensure you can salary sacrifice the lease – as well as the cars on-road expenses (petrol, service, registration, etc.).
At Bookssorted Contractor Payroll Services, we take pride in being a payroll management company who stays up-to-date with novated lease and salary sacrificing rules and regulations so we can ensure you get the best advice on how this tax deduction can work for you.
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We also work closely with finance companies specialising in novated leases to ensure you get the best service and support possible when choosing and purchasing your car, through to paying the lease and finalising the novation at the end of the lease.
If you want to know more, call us on 02 6161 8580 or email firstname.lastname@example.org.
At Bookssorted, we operate in Sydney, Melbourne and Canberra and we’re here to help! We are a payroll service company that has been in the industry for more than a decade, so we’re big enough to manage all your contractor payroll needs, yet small enough to know your name when you call! If you’re not with a payroll management company, or your payroll service isn’t providing you the quality service you need, chat with us and join the Bookssorted family.