When you buy a car, you must be prepared for a whole lot of expenses; fuel and maintenance costs are rising, which is nothing new these days. You may or may not have heard of salary packaging (salary sacrifice), which is a way to purchase the car of your dreams, with instalments that are deducted from your salary by your employer.
What is salary packaging?
Salary packaging (also known as salary sacrifice) is a finance system that enables employees to buy vehicles and according to the agreement, your employer makes monthly deductions from your salary, which has positive tax implications. If you would like to learn more about this system, ask your employer if they are prepared to sponsor your application and if so, you can search online for a leading Australian finance company that offers salary packaging.
All-inclusive packages
Of course, there are many costs related to vehicle ownership; car insurance, fuel and servicing, to name but a few, and the good news is, you can factor in these costs, so you don’t have big payments to make. Spreading your motoring costs means you don’t have to suddenly come up with a few hundred dollars and with tax benefits, many employees take advantage of this service.
Other finance options
Salary packaging can be used for the following:
- Laptop/computer
- Add to your superannuation
- Childcare services
- Further education (work related)
Talk to your employer to discover if they take part in salary packaging and if they do, you can start looking at Australian finance providers and make an enquiry regarding salary packaging.
Novated leasing
This is another name for salary sacrifice, novated leasing is a three-way agreement between the applicant, their employer and a finance company. One aspect of the agreement is the burden of making the monthly payments now lies with the employer, not the employee and the payment is deducted at source and paid to the finance provider. Click here for reasons you need management software.
Online solutions
Rather than having to go anywhere, you can start the ball rolling with a Google search to find a leading Australian finance company, one that offers salary packaging. Most Australian companies are happy to join a salary sacrifice system, which means you can purchase that new car using the package and add your annual motoring costs to the agreement.
Tax savings
Buying a car on salary packaging means that you pay less tax; pre-tax deductions mean you are only taxed on the income you receive, which is a considerable saving. Lowering your taxable income automatically means you are paying less tax and let’s face it, every little saving helps. The Australian Tax Office (ATO) accepts specific items that can be paid for using salary sacrifice; check their website for more information.
If you would like to take the first step to setting up salary packaging, Google can help you source a leading Australian finance company and hopefully, your employer is happy to help you.
