"Vehicle Salary Packaging - How Can it Save You Money?" - Summary

Putting it All Together
We've talked about the three ways of saving money when you salary package a vehicle via a Novated Lease. You can save money on:
- the purchase price;
- on GST; and
- on the salary packaging.
Now lets put it all together with a realistic example.
Say Mr. A. Person wants to buy a Ford Focus TDCI (Hatch) with a recommended retail price (On Road and with accessories) of $31,800.00.
The Novation company, with their access to fleet discounts etc. is able to purchase the car for $28,100.00.
Saving 1: $3,700.00
The Tax Invoice price for the vehicle of $28,100.00 includes GST of $2450.00. This GST is claimed by the finance company as an Input Tax Credit. (So is not included in finance contract.)
Saving 2: $2450.00
By Salary Packaging the vehicle under the Employee Contribution Method your net take home savings are approximately $4135.00 per year.
Saving 3: $4135.00 x three years = $12,405.00
Total Savings: $18,555.00
When you analyze a Novated Lease agreement the savings are quite considerable. Why would you go out and buy a car yourself - paying the total price and putting a great deal of your savings into the purchase - if you are able to novate one? The more I learn about this, the more I'm convinced its the way to go.

"Vehicle Salary Packaging - How Can it Save You Money?" - Part 3

Saving Tax
The third way to save money when you salary package a vehicle via a Novated Lease is through the effect it has on:
- reducing the income tax you pay: and
- the subsequent increase in your take home salary.

By Packaging the operational costs as well, the savings can be quite considerable.
In the above example (Quote dated 17/07/08) savings could be as much as $4,775.34 each year - totalling approximately $19,000.00 over four years!

*Table provided by Supanova shows an example of possible annual savings for this particular scenario.

Can You Novate a Car if You're Self Employed?

The simple answer is 'yes'. My husband - who knows about these things - tells me that if you have a ABN number and you draw a set wage from your business you can novate a car. Your company is the 'employer' and you are the 'employee'. You get all the pre-tax benefits that any other person would get. If you don't draw a set wage from your business (i.e. draw random amounts of cash), but still pay PAYE tax, you can also novate a car, but it will require a little more paper work from your end.