Novated lease is an important term that you need to get familiar with. If you are an employer who wants to win over the best individuals as well as offer extra perks to your staff, you will do well to find out how novated lease Adelaide arrangements can help both your workforce and your business.
So, what exactly is a novated lease Adelaide and how does it work? Despite the unfamiliar term, it is quite common in Australia. It allows the employer to make lease payments for a car on behalf of an employee. The usual practice is where the employer makes payments from the employee’s pre-tax income. This equates to the employee paying fewer taxes and receiving a pay increase. Since the lease is under the employee’s name, he is responsible for other obligations such as service and maintenance, but in case the employee leaves the company, all financial responsibilities go back to him or her.
Most novated leases are worked into the company’s salary packaging solution. A salary package involves an agreement between an employer and the employee stipulating that the employee is forgoing part of his salary in exchange for the employer providing non-cash benefits. Hence, it is also called ‘salary sacrifice’. This type of car leases offers some benefits to both the employee and the employer.
Novated lease arrangements benefit employees in that they have a more extensive range of options when choosing vehicles to obtain. Company cars are limited to specific makes and models, so the flexibility that novated agreements offer is understandably more appealing to individuals who want to use vehicles that suit their lifestyle. Also, changing employers does not require them to give up that lease.
As for the employers, the novated lease arrangements mean that they can provide more employee benefits at zero cost. They also don’t have to cope with the bother of supplying, insuring, and maintaining company vehicles. Besides these, allowing employees more freedom when it comes to their car choice presents employers in a better light, making them endearing to their staff.
A novated lease Adelaide undoubtedly benefits all the parties involved, which makes it a popular provision in salary packages offered by many reputable Australian companies. It is an option that allows everybody to win which makes a good relationship between the workers and the employer. If you wish to hit many birds with a single stone, then the novated lease is something you need to look at. To know more about the novated lease and why you should consider this option, visit our website.