Benefit from a Novated Lease no matter how much – or little – you drive
We’ve heard some people say that you have to drive a minimum distance each year to qualify for, or even benefit from, a novated lease. At RemServ, we are always looking to bust open myths and help you find out if a novated lease could be good for you. As such, there is absolutely no limit on the amount you need to drive to benefit from novated leasing. Whether you only road trip on weekends, commute every day for work or travel interstate fortnightly, financing a car on a novated lease can be a great way to make the most of your salary. Added bonus? You could also save on tax.
So how did this myth come to be? Let’s take a look.
There was a time when people’s driving habits determined what the use of their vehicle was actually for. The more kilometres that you drove (greater than 40,001km per year) led to the conclusion that you were using the vehicle for business purposes and, as such, a lower statutory rate of 7% applied (that’s the percentage that a vehicle is taxed at for Fringe Benefits Tax [FBT]). Conversely, the lower kilometres you travelled (less than 15,000km) meant that you weren’t using the car for business purposes so a higher statutory rate of 26% applied. There were also two other rates in between those thresholds.
This meant that people were hit with a different rate based on their driving habits, which didn’t accurately account for what people were actually using their vehicles for. On 10 May 2011, a phasing in of a new flat 20% statutory rate commenced and as of 1 April 2014 the flat rate took full effect. Essentially, regardless of how many kilometres you travel, the same statutory rate now applies. That means no record-keeping, no stress and just the convenience and potential tax and GST savings a novated lease can provide.
So take your car out and use it however you like… drive more… drive less… you can still enjoy all the benefits of a novated lease.
Disclaimer: This website contains general information and doesn't take your personal circumstances into account. Seek professional independent advice before making a decision.