The win-win of a salary sacrifice car

By Matt Burgess, 360 Financial Services

For Employees - Salary sacrifice your car

There are lots of benefits when you salary sacrifice a car.  A salary sacrifice car means all the lease payments and running costs are paid from your pre-tax salary.  A salary sacrifice car arrangement with your employer may even reduce your taxable income resulting in a bigger tax refund.  A further benefit of a salary sacrifice car is that the running costs of your salary sacrifice car are paid excluding GST.

As an employee a salary sacrifice car is a benefit arranged through agreement with your employer.  (See also information below for employers regarding for more information about a salary sacrifice car).

For Employers - The lure of the Salary Sacrifice Car

Give your employees a payrise without paying for it by allowing them a salary sacrifice car.

A salary sacrifice car program using novated leasing is a great way to provide a benefit to your employees without it costing more in wages expense (although you are likely to be liable for FBT on a salary sacrifice car).   A salary sacrifice car benefits an employee by enabling them to pay for their car pre-tax, reducing their taxable income.

The requirements of a valid salary sacrifice car arrangement
The salary sacrifice car arrangement should be put into place before the employee has done the work.
Make sure the contract of employment includes details of all remuneration, including the salary sacrifice car component.
The sacrificed salary must not be accessed by the employee for the period of the salary sacrifice car arrangement – it must be permanently foregone.

360 Financial Services would be happy to discuss your novated leasing and your salary sacrifice car needs.

This article discusses the benefits of salary sacrifice car arrangements. It is not intended to be legal or financial advice.  You should seek specific advice from your financial adviser.