Novated Lease Savings Case Study
To illustrate the savings that may be achievable when salary packaging a Novated Lease, we have prepared the following case study.
John’s company ABC Pty Ltd has entered into an agreement with packEDGE to provide employees the option of a Novated Lease under a Salary Packaging arrangement.
John wishes to buy a new Toyota Kluger Auto Wagon.
- He would like to lease the vehicle for 3 years.
- He estimates he will travel around 24,000 kilometres a year.
- His annual gross salary is $75,000.
Assumptions when preparing this case study:
- John is an Australian tax resident and has private health insurance
- ABC Pty Ltd is entitled to a full input tax credit (ITC) for all payments under the Novated Lease and has agreed to credit these ITC’s back to the employee’s package
packEDGE savings example on the Purchase Price
of the Toyota Kluger Auto Wagon:
| Recommended Retail Price (Inc. GST): | $52,235* | |
| Plus On Road Cost (Initial Reg. & Stamp Duty): | $ 1,778 | |
| Less packEDGE negotiated fleet discount: | ($6,500)* | |
| Less GST claimed by Finance Company: | ($4,158) | |
| Total: | $54,013 less | ($10,658) = |
| Amount Financed: | $43,355 |
packEDGE savings example on Servicing, Maintenance & Tyres:
| Scheduled and un-scheduled Maintenance - Retail: | $2,300 | |
| Replacement Tyres (4) - Retail: | $2,100 | |
| Less packEDGE negotiated parts & labour discount 30%: | ($1,320) | |
| Total: | $4,400 less | ($1,320) = |
| Net Amount: | $3,080 |
Total Vehicle Operating Costs Per Annum Include: $ 19,076.10
| Lease Rentals | |
| Servicing & Maintenance | |
| Registration Renewal | |
| Fuel Budget | |
| Comprehensive Insurance | |
| Less GST Credits (ITC’s) per annum: | ($ 1,720.65) = |
| Total Amount Packaged: | $17,916.45 |
Annual Take Home Pay Estimate
| Salary Only | Vehicle Not Packaged | Packaged Pre Pre & Post Tax Deductions | |
| Gross Taxable Income Per Annum | $75,000.00 | $75,000.00 | $75,000.00 |
| Car Allowance plus | $0.00 | $0.00 | $0.00 |
| Total Pre Tax Salary less | N/A | N/A | $ 9,601.00 |
| Net Taxable Salary | $75,000.00 | $75,000.00 | $66,399.05 |
| PAYG Tax less | $17,175.00 | $17,175.00 | $14,150.69 |
| After Tax Salary | $57,825.00 | $57,825.00 | $51,248.31 |
| Less Post Tax Deductions: | |||
| - Vehicle Operating Costs (incl. GST) | N/A | $19,076.10 | N/A |
| - Employee Contribution (incl. GST) | N/A | N/A | $ 9,147.00 |
| Estimated Take Home Pay Per Annum | $57,825.00 | $38,748.90 | $42,101,31 |
| Estimated Take Home Pay Per Month | $ 4,818.75 | $ 3,229.08 | $ 3,508.44 |
| Employee Advantage In Packaging A Vehicle P.A. | $ 3,352.41 |
Total Savings estimated over 3 years for John’s Novated Lease Package:
| Savings on Purchase Price of Vehicle: | $10,658 |
| Savings on Running Costs: | $ 1,320 |
| Take Home Pay saving if using Pre & Post Tax method (ECM) including GST Credit @ $3,352.41 per annum: |
$10,057 |
| Total Package Saving: | $22,035 |
| (Less GST on Residual Value of $19,510): | ($ 1,951) |
| TOTAL Estimated Net Savings over 3 years: | $20,084 |
| or per annum: | $ 6,695 |
| or per month: | $ 558 |