NOVATED LEASING SALARY PACKAGING
Salary Packaging allows you the flexibility to restructure your income,
deducting such expenses as motor vehicle lease payments and running costs from
your pre-tax income - as a result in most cases this leads to significant
taxation savings.
WHAT
IS A NOVATED LEASE
A FastPac Novated lease is a 3 way agreement between the following parties:
Simply through a Deed of
Novation the employer is responsible to meet the lease repayment on the
employee's behalf whilst the employee is employed by the employer.
Return to top of page
EMPLOYEE
CONTRIBUTION METHOD (ECM)
Simply the employee makes an after tax
contribution from their salary towards the value of the benefit. by doing so
the contribution reduces the taxable value of the Fringe Benefit by the same
amount of the contribution, this reduces the FBT liability. Employer
contributions include GST.
Return to top of page
FRINGE
BENEFIT TAX (FBT)
Fringe
Benefit Tax was introduced on July 1, 1986. It broadly taxes employers in
respect of non cash benefits provided to employees in addition to or in place
of cash salary. Also this is in line with the administration of the new tax
system (GST) Act 1999.
Statutory Formula Method
CarFleet uses the Statutory formula Method which is determined by applying the
following formula under 5.9(1) or the FBT Act.
Taxable value = A x B x
(C divided by D) - E.
Where:
A = the base value of the car
B = the statutory percentage
C = number of days during the FBT year the car Fringe Benefit was provided
D = number of days in FBT year
E = the amount (if any) of the residual payment of employee contribution
The statutory function is the total annualised kilometres travelled during
FBT year.
Annualised KM's -
Statutory%
Less than 15,000 - Statutory 26%
15,000 to 24,999 - Statutory 20%
25,000 to 40,000 - Statutory 11%
Over 40,000 - Statutory7%
Residual Guidelines
The residual % listed below are the minimum requirements set down by the
Australian Taxation Office of the base value of the vehicle (including options
and accessories)
1 year - 65.63%
2 years - 56.25%
3 years - 46.88%
4 years - 37.50%
5 years - 28.13%
Return to top of page
ASSUMPTIONS
The FastPacT Calculator uses a number of assumptions to calculate the salary
package estimation, including, but not limited to the following:
-
employees claim the
tax-free threshold and have no other packaged component, other than contained
herein.
-
Employers meet all
running costs of the vehicle.
-
Any FBT liability of
the Employer as a result of providing benefits to the employee is reduced to
nil by employee benefits.
-
The Employer is a
Company and can claim full tax credits against vehicle expenses.
-
All vehicles are
provided to employers by way of "full novated leases" as described in Taxation
Ruling TR 1999/15 'Income tax and fringe benefits tax: taxation consequences of
certain motor vehicle lease novation arrangements', and are not hire purchase
transactions for the purpose of division 240 of the Income Tax Assessment Act
1997.
-
Motor vehicles are
available for the private use of Employees every day of the relevant FBT year.
-
An Employee indicating
that he/she has private health cover satisfies the definition of having
'private patient hospital cover' for the purposes of the Medicare levy
surcharge.
-
An Employee without
private health cover accurately states their spouse's taxable income, whether
they maintain any dependents, and either the single or family threshold applies
for the entire year, for the purpose of the Midicare levy surcharge.
Method
of calculation
All calculations are based on tax rates for the year ending June 2005. The
Statutory Fraction method and employee contribution method of calculating FBT
liability for a motor vehicle is used.
Return to top of page
DISCLAIMER
The
information, material and calculations contained on our website have been
compiled in good faith. No warranty or representations as to the accuracy of
the information, material and calculations are made and liability for any loss
or damage resulting from any reliance on the information or for any errors in
calculation or any omissions is expressly excluded.
All information and
calculations are subject to change without notice and should be used as a guide
only.
You should not rely on
any information contained herein without first seeking your own independent
legal, financial, accounting and/or other professional advice. You are also
encouraged to seek your own professional advice in relation to any taxation and
accounting implications specific to your personal circumstances.
We do not guarantee that
our website will be free from viruses, or that access will be uninterrupted.
Whilst every effort has been taken to ensure the security and confidentiality
of information submitted and processed via our website we cannot guarantee 100%
protection and any liability for damages arising from or in connection with the
use of this site is expressly excluded.
This website may contain
links to other sites operated by third parties. We make no warranty or
representations as to the quality, accuracy or otherwise of information and
services offered by such third parties. Any such information and/or services
are offered by the relevant third party and not by us.
Return to top of page
|
