We know that employee benefits play an important role in both rewarding employees and retaining them. Where do you see novated leasing fitting into the benefits mix?
Novated leasing is one of few employee benefits remaining in the corporate sector. Whilst the treatment of FBT has changed over the years, novated leasing is still a cost-effective and convenient way for employees to finance and maintain a motor vehicle.
Novated leasing helps employers attract and retain the best employees.
The last few years have also seen a trend of employers across all industry rationalising their traditional ‘tool of trade’ fleet and offering novated leasing, providing employees with more flexibility and choice.
How should employers be pitching novated leasing to their employees, so that they see it as something generous they are being offered?
Novated leasing should certainly be pitched as a benefit to employees. Employees can achieve significant savings in income tax, GST, running costs and time by opting for a novated lease – not to mention flexibility and choice of motor vehicle.
Employees can choose to novate a new, demonstrator or used motor vehicle. In fact, employees who already own a motor vehicle may also choose to novate their motor vehicle by way of a sale and leaseback.
What sort of myths would you like to bust?
There is a common misconception that novated leasing is only beneficial to high-income earners. In reality, this couldn’t be further from the truth.
An employee doesn’t need to be earning a six-figure salary to financially benefit from a novated lease. A novated lease may benefit anyone who has or requires a motor vehicle.
In support of the above, the national average purchase price of motor vehicles under novated lease is $38,758.
Another common misconception is that novated leasing can be all too difficult for both employers and employees. Again, this couldn’t be further from the truth.
ORIX’s Tied to Payroll process eliminates reconciliations and simplifies the salary deduction and remittance process for employers, whilst our novated specialists guide employees through a thorough yet simple process and ensure complete quote transparency with our itemised quotes.
Has the game changed in terms of new technology (for logging mileage, etc)?PP: Technology is a large part of the evolving world of fleet, as is the case for most industry. Self-service tools are simplifying processes for both employers and employees.
Online tools and smartphone applications are allowing employees to view and manage their accounts whilst providing handy features such as:
• novated leasing calculators
• mobile claim submission forms
• kilometre and budget management tools
• account transaction history
• fuel, service and parking station locators
Do you anticipate the upcoming federal election will see any changes proposed to FBT?
FBT has been under the spotlight, on and off, for over a decade, and whilst we have seen changes to the FBT formula, novated leasing can still offer significant tax savings.
In recent years the statutory method has come under threat, which impacted the motor vehicle and leasing industry at large. FBT will no doubt be reviewed by future governments.
For an employer wanting to set something like this up, what would their first steps be?
It’s important to look for a provider who is willing to work with the employer and can demonstrate flexibility at all levels.
Many HR managers and payroll managers have a misconception that novated leasing attracts a whole lot of additional administration – for example, maintaining policy, salary deductions, remittances, budget reconciliations, and of course dealing with FBT. All very valid concerns if the wrong provider is appointed.
Employers need to look for a provider that will offer exceptional service to both them and their employees, with the latest in technology and seamless integration with their payroll systems.
A novated lease should be a ‘set and forget’ for employers, without any hassles, and should be just as simple for employees.