Frequently Asked Questions

Australian Car Packaging Novated FAQ

What is a Novated Lease?

A novated lease is a three way agreement ("novation agreement") between an employer, employee and lease company, under which the employee leases a vehicle from the lease company, and employer agrees to take on the employee's obligations under the lease.

Benefits for the employee:

  • Employee’s car of choice, registered and insured in the name of the employee
  • Employee does not have to be the main driver, and no business use required
  • Employee can Novate one or more cars, and also have a company provided car at the same time
  • Potential for significant income tax savings, as a portion of the weekly car costs are deducted pre tax
  • Savings on GST on all of the running and finance components
  • AUSTRALIAN CAR PACKAGING pays the GST on the purchase price of the car, adding to the employee savings
  • Access to applicable volume fleet discounts due to AUSTRALIAN CAR PACKAGING’s buying power
  • Vehicle stays with the employee and can be transferred to a new employer
  • Provides employees with a tax effective mechanism to structure their salaries.
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Who Pays the FBT?

The structure of the salary deductions comprises a portion of your car expenses deducted before tax and the remainder deducted post tax. This structure is referred to as the employee contribution method (ECM). This method of salary packaging structure negates any FBT applicable to the Novated Lease. (Subject to the employee travelling the KMs nominated by the employee each FBT year).

How much GST do I save?

The savings on GST will vary depending on the amount of your vehicle, there will also be savings made on the annual running costs of your vehicle. Basically the employee saves one eleventh on all of their running costs, fuel, services, tyres etc. Over 15,000km per annum this will equate to approx. $1,000.

Do I pay fees with a Novated lease?

There is a charge of $30.00 per month for AUSTRALIAN CAR PACKAGING to administer the salary packaging for the employee.

If I change my job what do I need to do?

You need to advise AUSTRALIAN CAR PACKAGING as soon as you know you are going to change jobs. You new employer may agree to continue salary packaging your car on the same basis, or alternatively the employee simply continues to make the lease payment on the car from the post tax (take home pay) salary, but you will not be able to package your car costs pre-tax.

What is the residual payable?

All Novated Leases have a residual value or loan balance at the end of the finance term of the lease.

This is an Australian Tax Office requirement. This is a percentage of the cost price and is itemized at the commencement, and doesn’t change over the term. The payments over the term reduce the loan balance down to the residual. The payments each month are structured in this way, so note; you are not paying off the car, and then paying a residual. At the end of the term when the residual is payable you can: Trade-in the car, sell the car privately, payout the residual or refinance the residual and continue the novation.

Can I use the car for private use?

Yes, the vehicle may be leased for 100% private use, and you do not have to be the main driver.

Can I buy any car and Novate it?

Any new car can be Novated with AUSTRALIAN CAR PACKAGING. Used cars are available to be novated but have an age limit of 4 years old and 40000km’s travelled at the commencement of the novation.

Should I seek my own independent financial advice?

Circumstance can differ for employees, and as such AUSTRALIAN CAR PACKAGING recommends employees check with their own financial adviser to ensure salary packaging is a suitable option.

Do I need insurance?

Yes, as with all vehicle finance, comprehensive motor insurance with AUSTRALIAN CAR PACKAGING as an interested party is required. A paid in full certificate of currency is required before any vehicle settlement will take place.

Employees can utilize AUSTRALIAN CAR PACKAGING insurance option, or select their own provider.

What insurance is there to protect me if I take out a Novated Lease?

There are three insurance products that AUSTRALIAN CAR PACKAGING offers:

  1. Comprehensive Motor Insurance – all Novated Lease customers are required to have insurance with ‘AUSTRALIAN CAR PACKAGING Pty Ltd’ as an interested party.
  2. GAP Insurance – this insurance covers you for the difference between the vehicle value if written off and the lease payout figure.
  3. Lease Protection Insurance – Provides up to 3 months lease payments in the event of uinvoluntary redundancy.
What happens if I spend more or less on petrol and other car expenses than I thought I would? We regularly monitor your spending patterns and AUSTRALIAN CAR PACKAGING will suggest you repackage your car expenses if necessary, to maximize your tax savings throughout the term of the Novation. A range of fuel cards, including Shell, Caltex and BP are provided for the convenience of our valued clients.

How do I get started or obtain more information?

You simply log on to the AUSTRALIAN CAR PACKAGING web site or call AUSTRALIAN CAR PACKAGING directly on the number below.

How long will the process take?

AUSTRALIAN CAR PACKAGING will obtain firm pricing for your consideration, and provide a specific salary packaging quotation for you, without obligation. Allow 1-2 working days for the fleet pricing and detail to be emailed to you.

Should you wish to proceed, the documentation can be turned around within 1-2 working days, and delivery of your vehicle is subject to the availability of the particular car of your choice.

Please call Australian Car Packaging directly for more information or to obtain an obligation free quotation for your car. Earl Thompson on Mobile 0404 477 345 or 1300 313 111.

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