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Novated lease - the term doesn't seem like something you’d like to get familiar with, but it's to your own detriment not to look deeper into its meaning. If you’re a manager who wants to attract the best people as well as offer more benefits to your present employees, you’ll do well to discover how novated leases can help you encourage commitment from your workers as well as improve your net profit. 

What is this kind of lease and just how does it work? Inspite of the odd phrase, it’s actually very common in Australia. Primarily, it enables the employer to make lease payments for a motor vehicle on the part of a staff member. The typical process is for the company owner to make payments from the employee’s pre-tax earnings. This essentially equates to the worker paying less taxes and then receiving a pay rise. Considering that the lease is under the employee’s name, she or he is in charge of other responsibilities such as service and maintenance, but in the event that the worker leaves the business, all obligations go back to him or her. 

Most novated leases are worked into companies’ salary packaging solutions. A salary package involves an agreement between a company and an employee stipulating that the staff member is forgoing a portion of his or her salary in exchange for the employer giving non-cash benefits, therefore its other name “salary sacrifice.” Car leases are among the common benefits that figure into these packages. 

Novated leases benefit employees in a way that they have a broader range of alternatives when picking cars to rent. Company vehicles are often limited to specific models and makes, therefore the convenience that novated leases give is understandably more desirable to individuals who want to have cars that suit their way of life. Furthermore, switching companies does not require them to give up that lease. 

As for employers, novated leases mean that they are able to give more worker benefits at little to no charge. Additionally they do not have to cope with the bother of providing, safeguarding, and looking after company cars. In addition to these, permitting employees more flexibility when it comes to their vehicle choice presents companies in a far better light, causing them to be more endearing to their workers. 

Obviously benefiting all the parties involved, novated leases are naturally a typical provision in salary packages provided by Australian firms. It is but estimated for an option that allows everyone to win to become famous. If you wish to be able to hit many proverbial birds using a single shot, novated leases are definitely something you must look deeper into.

Resources: http://simplygreen.com.au/- A website that provides salary packaging services.




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