Are there different types of novated leases?
Yes – you have the choice and convenience of a fully-maintained lease or you can choose a self-managed lease.
With a fully maintained lease, a dedicated leasing consultant coordinates the set up and ongoing management of your lease, including sourcing a car of your choice, arranging your finance, calculating your budgets for running costs and lease repayments upfront, plus managing your end-of-lease options. You could benefit from Maxxia’s national buying power when purchasing a vehicle through our extensive dealership network.
You also have the option to choose comprehensive insurance from Maxxia's insurance provider, or you can choose your own comprehensive insurance provider. You also have the option for additional lease protection products through Maxxia’s providers including:-
- Lease Protection
- Total Loss Assist (gap cover)
- Residual Protection
- Extended Warranty
Maxxia can also provide you with a choice of three convenient fuel cards – Ampol, BP or Shell.
With a self-managed lease, you take full control of the day-to-day management of your lease – from organising your own finance and insurance, to setting your own budget to pay for the lease repayments and running costs. However, Maxxia will still set up your salary packaging account so that your lease repayments are automatically deducted on a fortnightly basis and the lease payment paid to the financier monthly on the nominated date. Maxxia will process claims for reimbursement of eligible expenses that you submit for processing. Both lease payments and claims are paid subject to availability of funds in your account.
When you go to top up your fuel, a self-managed lease has the option of a BP Fuel Card.
Can I choose the car?
Yes! In most cases you’re not limited to any particular car type, model or make. You’re not restricted to just new cars with a novated lease, either – you can lease a used car, or even your existing vehicle. (Some conditions may apply and the age of the car you wish to lease needs to be considered.)
Do I drive enough to benefit from a novated lease?
Whether you drive fewer than 10,000 or more than 50,000 kilometres a year, a novated lease is a great way to finance a car. And you could save on tax.
Do I earn enough to benefit from a novated lease?
Yes. The claim “you need to earn big to benefit from a novated lease” is probably the main myth to debunk.
For example, an employee earning $60,000 could save more than $1,700 a year on a novated lease.
You don’t pay GST on the purchase price of a new car purchased through a dealership instantly saving you thousands, and then there’s the convenience factor: all your car’s running costs – fuel, servicing, registration, insurance – are bundled into one regular payment, meaning bill shock is a thing of the past.
So you’re saving time and money – and reducing your stress levels.
How does novated leasing compare to a car loan?
Hold the GST.
That’s right – when you source a new car through a dealership, you don't pay GST on the purchase price.
Potential tax savings.
Because part of your novated lease payments come from your pre-tax salary, your taxable income could be less. Once your deductions commence, your payslip will show the pre- and post-tax deductions made to Maxxia relating to your novated lease. With a regular car loan, you’d be making all loan and running expense payments with your post-tax salary – and giving more to the taxman.
Access to competitive third-party pricing with a fully maintained lease with Maxxia.
As one of Australia’s leading novated lease providers, Maxxia has long-held relationships with suppliers and insurers nationwide, and can help you get competitive prices. We also deal directly with your mechanic on the servicing and maintenance of your vehicle.
Roll up, roll up.
Cruising along an open road in your new car aside, it’s the convenience of a novated lease that many enjoy. In addition to your car repayment, all of those dreaded running costs – fuel, servicing, insurance and, most pertinently, registration – are rolled up into one regular payroll deduction.
What happens at the end of the lease?
Near the end of your lease – usually one to five years – Maxxia will contact you to discuss your options. You may be able to:
• keep the car: you pay the remaining amount owing on the car (conditions may apply)
• refinance the car (conditions may apply if the car is more than seven years old at the end of the lease, or valued at below $5,000)
• upgrade to a new car: you would trade in your current vehicle and pay any amount owing
• sell the car: you will need to pay off the remaining amount owing
What happens if I change jobs during the lease term?
With people changing careers more than ever, this is a likely scenario for many people. But you have a number of options available and subject to whether you are transferring to another SA Government agency employer. Including:
• paying the amount owing and buying the vehicle outright
• continue paying the lease and running costs directly yourself (with your post tax funds)
• transfer the lease to your new employer (subject to your new employer's approval).
What if I spend more or less than I budgeted?
Circumstances change, markets fluctuate and all manner of other variables can push your expenses north or south. With a fully maintained lease Maxxia is available to help.
If you are spending MORE than budgeted…
Maxxia will contact you to discuss increasing your regular payments to ensure you can cover the higher amount. You should also monitor your online statements regularly and contact Maxxia if you notice your budget is being overspent. Maxxia can adjust your deductions even sooner.
If you are spending LESS than you budgeted…
You can contact Maxxia to discuss adjusting your running expense budget in line with your usage.
With a self-managed lease, you will need to monitor your account balance and expenses to ensure that you have adequate funds to pay your regular lease payments and to cover claims that you may lodge for reimbursement.
Where insufficient funds are available in your account, Maxxia will be unable to pay your lease payment and you will be required to pay the amount directly to the financier using your post-tax funds. This payment is not able to be claimed as a reimbursement and the associated tax benefit for this amount is foregone.
At the end of your lease term Maxxia will reconcile your account within 60 days. If there is money in your account, the funds will be sent to your employer to be processed via payroll, with PAYG to be applied before the balance is paid to you.
What does FBT and ECM mean?
You’ve probably seen both these acronyms pop up in your benefit quote or online calculator result.
Fringe Benefits Tax (FBT) is a tax which is applied to benefits you receive from your employer that are not in the form of cash salary or wages. For example, a novated lease is a benefit outside your cash salary or wages – so it is subject to FBT. As of the 1st April 2020, the FBT rate is 47%.
This is where the ECM bit kicks in.
But what does ECM mean? Now a standard novated lease calculation, the ECM – or "employee-contribution" method – helps offset any FBT you may be liable to pay on your novated lease. By making after-tax as well as pre-tax payments you could reduce the taxable value of your car to $0, and minimise the risk of FBT liability at the end of the FBT year (31 March).
Are there any cars I can’t lease?
Yes, The SA Government does not have a specific list of vehicle available to lease. Beyond that, vehicles designed to carry one tonne or more and designed to carry 9 passengers or more are also not eligible under a novated lease. So that means some utes are off limits, but some of the Australia’s most popular utes and trucks including the Ford Ranger and Toyota Hilux are OK.
Can I take out multiple novated leases?
Whether you’re seeking a ‘weekend car’ or something for an immediate family member, you can – dependent on your employer’s novated lease policy – lease multiple new or used cars and get the same convenience and cost-effectiveness. The additional vehicles would be leased under your name and the payments deducted from your salary.
What is the approval process?
With a fully maintained novated lease with Maxxia, getting approval for your novated lease is fast and easy. Maxxia can obtain approval of applications within four hours of receiving your request with our secure on line application process with our panel of financiers.
With a self-managed novated lease, the approval process will be dependent upon which financier you select and you manage that process directly with your chosen financier.