With the end of financial year hurtling through again, many of us are left wondering how we can juggle our tax books a little better, and still remain on the right side of the law. Fortunately, there are some clever ways that you can get the little luxuries you want while levelling your tax, with very little effort. Our team of Perth novated lease experts have put their heads together, and have come up with a quick and easy guide to the Fringe Benefits Tax, so you can understand the cogs that turn behind a novated lease.

What is a novated lease?

A novated lease is a great way to work your car into your salary package, which would reduce your taxable income. Once you find the vehicle for you, find a lender who can arrange for the payments to be paid by your employer- this is valid for as long as you stay employed at the company, but any further payments will fall back to you if you lose your job or resign. Annual kilometres are taken out of your pre-tax salary, so you can end up with a fantastic new car and dropping your taxable income- which could mean saving yourself a tax bracket for the next financial year tax return.

How will the Fringe Benefits Tax affect me?

Originally, the FBT arose because of employers giving perks and side-bonuses to their more valued team members. This wasn’t usually a monetary value, but something more tangible such as a new car. The advantage of this was that there was no tax payable, so employers were able to stretch their dollar a little further while keeping their best employees happy. It took until 1996 before the top tier workers were getting more and more than their co-workers, and the FBT was introduced to try and sway the scales. This tax was to be covered by the employer on any fringe benefits, and covers any perks such as mobile phones, GPS systems, and cars. This FBT tax rate is usually affected by how many kilometres you do each year, as your car depreciates the FBT rate also decreases- however, if you’re kilometres travelled don’t meet your estimated distance at the start of the tax year, there will be surplus tax to meet the difference.

Who should I talk to about getting a novated lease?

If you’re interested in applying for a novated lease, do some research and find the best novated lease company for you. The Allcredit team of novated lease experts offer an easy and efficient application process, and a speedy approval time so that you can get your wheels on the road, faster. Allcredit is an Aussie owned and operated company, with the best industry knowledge and tips to find the perfect option to suit you and your finances. Our friendly team works hard to make sure that our customers are receiving professional, honest advice, and the best deals on their finance solutions.