Boss congratulating Novated leasing EV to employee in Australia showcasing cost savings, employee retention, and eco-friendly electric vehicle perks.

Novated Leasing: Save Money and Boost Employee Retention Today!

In today’s competitive job market, attracting and retaining talented employees is more challenging than ever. While salary is important, businesses must now offer additional perks that improve work-life balance and financial well-being.

One increasingly popular benefit is novated leasing, which offers significant tax savings to employees while being cost-neutral for employers. But how does novated leasing help your business beyond just offering employees a new car?

Let’s explore how this salary packaging option can improve your employee retention and save your company money.

What is Novated Leasing?

Novated leasing is a financial arrangement where an employee can lease a vehicle and pay for its costs—such as repayments, fuel, maintenance, and insurance—through their pre-tax salary. This makes it a highly tax-efficient way for employees to afford a new car. For employers, offering novated leasing through a provider like One Car Group is a simple and effective way to enhance employee benefits without increasing salary costs.

Benefits of Novated Leasing for Employers

Offering novated leasing is a smart move for employers looking to provide competitive salary packaging options. Here are some of the most significant benefits:

1. Boost Employee Satisfaction Without Additional Costs

By offering novated leasing, employers can give their staff the opportunity to save thousands of dollars each year in tax. Employees view this as a direct financial benefit, which can feel like a significant pay rise, even though it doesn’t cost the company anything extra. The setup is easy, and One Car Group handles the administrative burden, so there’s minimal impact on your internal processes.

2. Improve Employee Retention and Recruitment

In an era where job seekers evaluate benefits packages more closely, novated leasing can set your company apart. Large corporations have been offering novated leasing for decades, giving them a competitive advantage when recruiting top talent. By providing this benefit, smaller and mid-sized businesses can level the playing field, making them more attractive to high-quality candidates. It’s also a great way to retain employees who might otherwise look elsewhere for better perks.

According to surveys, companies offering novated leases often report higher levels of employee satisfaction, which correlates directly to improved retention rates. Employees who feel valued through financial perks are more likely to stay with their employer for the long term.

3. No Additional Payroll Costs

Novated leasing is fully managed through salary packaging, which means employers do not bear any direct costs. Employees’ vehicle finance and running costs are deducted from their pre-tax salary, reducing their taxable income. There are also no additional administrative costs for businesses, as providers like One Car Group handle the entire process, including payroll deductions and payments to suppliers.

Tax Advantages for Employers

While novated leasing offers direct tax savings to employees, it also benefits employers. Here’s how:

  • Fringe Benefits Tax (FBT) Exemption for Electric Vehicles: Recent changes to Australian tax law mean that novated leases for certain electric vehicles (EVs) are now exempt from FBT, further boosting the appeal of this option. This allows employers to offer environmentally-friendly incentives without incurring additional FBT.
  • No GST on Running Costs: When employees salary package their car with a novated lease, the vehicle’s running costs (such as fuel, servicing, and insurance) are paid GST-free. This provides additional savings for employees, making the benefit even more attractive.

How to Implement Novated Leasing in the Workplace

Setting up a novated leasing program in your workplace is easier than you might think. One Car Group handles the majority of the administration, making the process seamless for employers.

Step-by-Step Implementation:

  1. Consult with One Car Group: A no-obligation consultation will help you understand how novated leasing can work within your business structure.
  2. Employee Agreement: Once you decide to offer novated leasing, your employees can enter into a novation agreement, which is a three-way contract between the employee, the employer, and the lease provider.
  3. Payroll Deductions: Employees’ lease payments and running costs are deducted from their pre-tax salary, and One Car Group manages the payments to suppliers like fuel companies, insurers, and maintenance providers.
  4. Ongoing Management: One Car Group takes care of the lease management, including tracking budgets and running costs, ensuring both employers and employees can enjoy a hassle-free experience.

FAQs for Employers

 No, the novated lease transfers with the employee if they leave your organisation, and you are not liable for any further payments. The lease and car follow the employee to their next job or revert to them personally.

Not at all. One Car Group manages all aspects of the lease, including invoicing and disbursements to suppliers. Payroll deductions are straightforward and integrated into your existing payroll processes.

Employees can lease a wide range of vehicles, including petrol, diesel, and electric vehicles, depending on their personal preferences and tax-saving goals.

Conclusion

Offering novated leasing as part of your benefits package is a powerful, cost-effective way to boost employee satisfaction, retention, and recruitment. With minimal administration and significant benefits for employees, businesses of all sizes can enhance their compensation packages without increasing payroll costs.

To learn more about how your business can implement novated leasing, contact One Car Group today for a free 30-minute consultation and see how easy it is to implement novated leasing in your workplace.