There are a lot of reasons why people choose to set up a novated lease with Positive, and one of them is to save tax! But if you have an employee who has been wondering whether they have to pay FBT on their novated lease, here’s what you need to know about novated leasing and FBT.
What is FBT?
Fringe Benefit Tax (FBT) is a tax that employers must pay when their employees use certain benefits such as car, phone and travel. If your employer provides you with a car for your personal use, it is important that you understand whether or not you will be charged FBT or how it can be offset so that you don’t have to pay FBT.
What is a Novated Lease?
A Novated Lease allows you to pay car repayments and other vehicle expenses from your pre-tax salary lowering your taxable income. Many novated lease consumers also prefer the ‘out of sight, out of mind’ no-fuss bill payments. Your Novated Lease can be configured to cover things like, fuel costs, rego, tyres, servicing, insurance, repairs and even roadside assistance!
Why a Novated Lease?
A Novated Lease reduces your taxable income. Make repayments, maintenance, fuel, insurance and even registration from your pre-tax income, and reduce the amount of tax you pay upfront. You can choose the car you want and take it with you to your next job if you change employers. A range of novated car lease options allows you to choose those with flexible terms, fixed interest rates, and no deposit requirement.
Do I have to pay FBT on my novated lease?
When people set up novated leasing, this is a question that we get asked a lot. When your initial calculations are performed, Positive works on a no FBT outcome when setting up your Novated Lease, which means there is no FBT risk to you as an employee or to your employer. By using an Employee contribution method or post tax payment, the FBT that is required is effectively reduced to nil. The FBT tax rate is the equivalent of the highest rate of tax, for many employers their marginal rate of tax is less, therefore it makes sense to offset and save.
There is little to no FBT risk when setting up the Novated Lease with Positive Salary Packaging to help get the best outcome out of your vehicle and save you money. We can even put together a “No FBT Guarantee” program with your employer if they have concerns.
Speak to the team at Positive Salary Packaging about our Novated Lease solutions today