With pump prices per litre hovering around $1.65 for premium and $1.43 for regular, many people use shopper dockets to save a few dollars. But with novated leasing you could be paying just 87c per litre.
Using a novated lease to manage your motor vehicle is one of the smartest ways to save on tax and obtain discounts for running your vehicle. It’s simple — just novate your existing or new vehicle. By doing this you pay for the running costs pre-tax and save the GST on the spend.
If you have a novated vehicle and are paying $1.43 for a litre of regular fuel:
- You save the GST of 13c per litre.
- Assuming you earn more than $37,000 per year, you save one-third of the balance of $1.30, which is 43c per litre.
- The result is 87c per litre for regular fuel.
Considering most employees use their vehicle to drive approximately 20,000 km each year, and with a conservative fuel economy estimate of 10 litres per 100 km, 2,000 litres of fuel will be purchased yearly. This equals a saving of $1,120.
Better than a shopper docket
When you compare this to shopper docket deal of 4c per litre off, there is a potential saving of $80 per year (assuming you use a shopper dockets each time you fill up). Novate@bility can assist you in converting your existing vehicle to a novated lease through sales and leaseback, or if you are looking to buy a new car, use novated leasing to save thousands.
My family has two cars, can I novate both?
The answer is yes, absolutely. You can novate your car as well as your partner’s car. If you only novate one, it’s good practice to choose the partner who pays the most tax, as the savings will be higher. If you both earn the same amount, then each of you can novate your vehicle. From the example above, two vehicles will save in excess of $2,240 per year.
You can currently novate a vehicle that is up to 5 years old by doing a sale and leaseback. In this scenario, the financier buys your vehicle and pays out the value of it to you. Ownership of the vehicle passes to the financier, until you make the final repayment. There are two requirements: that you are employed and can afford the repayments. Novate@bility can assist you to work out how much can be saved and the personal benefits of you novating your vehicle.
The take away here is there are significant savings made when novating your vehicle. A two-car family will save even more and if you take into account savings on maintenance items, it just gets better and better. In most cases the overall savings are $6,000 per year for both vehicles, which is an equivalent $10,000 per year in salary. Now that is a tax bonus that is very hard to ignore!