When the Howard Government introduced Goods and Services Tax back in 2000 Australians from Perth to Hobart and everywhere in between let out a collective groan. Nobody likes paying more for the same and equally nobody enjoys paying more tax. So what has this got to do with Novated Leasing? Simply put Novated Leasing is your shield to avoid any unnecessary GST payments on the purchase and maintenance of your new or second hand vehicle. The minimisation of GST is one of the most important elements of Novated Leasing and knowing how it operates can help you maximise your savings.
The vehicle purchase price
As well as saving with fleet discounts Novated Lease customers can also save GST on the purchase price of their vehicle. This saving is significant especially on new vehicles as the price always includes extras and additions. Ordinary finance agreements do not cover this GST saving. Adding this GST saving to bulk and fleet related purchase discounts takes a lot of the sting out of new car prices.
Fuel purchases
Saving with discounts on fuel purchases is like the gift that keeps on giving. These savings can be made where your Novated Lease provider is also a Fleet Management provider. In these cases standing agreements with fuel providers can bring discounts on fuel prices so it’s important to ask about this from the outset. Continually saving in this area can mean that fuel cost rises are less painful and fuel efficient vehicles are even more cost effective. In this sense diesel, petrol and LPG vehicles should see a real saving.
Servicing, parts and labour
Like purchase price GST can also be saved on servicing, parts and labour costs. This is again significant as it means that you pay less for these services than would otherwise be the case. While fuel and purchase price can see good discounts as a result of bulk buying these discounts are smaller in comparison to the discounts which can be achieved by a bulk buying fleet management company for servicing, parts and labour.
Final thoughts
Making savings in any area is highly satisfying. While this is true of almost all situations it is especially true for saving money on tax. Thinking ahead and planning with a Novated Lease means that you can avoid GST on a large range of transactions. Yes, Novated Lease holders need to be aware that they need to pay Fringe Benefit Tax (FBT) however this charge is not as significant as the savings which can be made. Discounts and GST free transactions work for everyone involved and they can make the difference between a little spare cash and a lot.