FRONT LINE TOP GEAR NOVATED LEASING PROGRAM
Getting you on the road in Top Gear. . .
How does it Work?
Our novated lease program is called Top Gear Novated Car Plan.
Novated leasing allows you to pay for your vehicle and associated operating costs with pre-tax income. In effect it can deliver a financial benefit to you!
A novated car lease is a three-way agreement between a car financier an employer and an employee
(you). The car is novated (or assigned) to your employer by way of a Novation Agreement. You salary sacrifice the vehicle lease, operating costs and FBT from your pre-tax salary, which reduces your taxable income.
What are the benefits of a novated lease for the employee?
You choose the car you want under either a finance lease or operating lease using pre-tax dollars (salary sacrifice) to pay for finance and all running costs.
No GST on the vehicle purchase price or the running costs. Already a 10% saving!
You benefit from our buying power as we pass on any discounts on fuel and maintenance costs .
You choose the lease term - between 1-5 years.
You have access to large discounts otherwise unavailable to individuals.
You have the ability to build equity in your vehicle.
You have the ability to transfer the lease to another employer.
You can have your lease structured to meet your individual requirements.
You can sell or trade your car at lease-end and keep any profit.
The Front Line Team makes the entire process of easy.
With Front Line Top Gear’s extensive purchasing power to buy vehicles at a lower cost, means lower lease payments and running costs for you.
Frequently Asked Questions about Novated Lease
How will the Front Line Financial Team help me to make a decision?
We understand your employer's novated lease policy and we will assist you in matters such as:
- Vehicle choice, availability & pricing
- Advice on salary packaging
- Understanding Fringe Benefits Tax
- Understanding novated leasing benefits Packaging maintenance, tyres, fuel, insurance and
registration into your lease Credit approval process
Can I arrange a novated lease on any vehicle?
Yes, We have access to all manufacturer brands, makes and models. You are not restricted in any way to one manufacturer and their product range (unless your employer policy specifies this). We source vehicles at competitive prices across the full range of manufacturers both local and imported brands.
When should I begin the process?
We would encourage you to contact us as soon as you consider a novated lease. Once we know your requirements we can give you a realistic timetable on the whole process. Vehicle delivery times may vary from model to model; some have a waiting period of up to 6 months.
Can I source my own vehicle?
Yes, you may source your own vehicle and pricing. However, in our experience, it is far less complicated and less stressful to let us handle this. We have excellent dealers Australia wide and strongly recommend that to ensure you get the best price we also source a quote for you.
What vehicle choices do I have?
Please refer to your company vehicle policy first to ensure you know of any restrictions.
We will allow you to novate:
New vehicles
A second hand vehicle, either your own or purchased from a reputable dealer, providing that it will not be more than 7 years old at the end of lease term. We have no restriction on the make or model of vehicle you choose, as long as you are able to meet your financial Obligations.
What Should I do before I proceed?
You should be able to answer the following questions:
- Does my employer allow me to have a novated lease?
- Do I understand the benefit of salary packaging my vehicle of choice with Front Line?
- Is my preferred vehicle make and model allowed within my employer's policy?
- Have I speclfied all the vehicle options or accessories I want?
- Have I estimated the total annual kilometres realistically?
- Is my preferred lease term the most appropriate for my needs and the vehicle I've chosen?
Do I need to insure my vehicle?
Yes, the leased vehicle must be insured at all times during the
lease period, You have the choice of our comprehensive insurance underwritten
by Lumley General Insurance, or you can use your own insurer.
If you choose your own insurer, you will need to provide evidence
of insurance, with us noted on the policy, before the vehicle is delivered to you.
What restrictions are there on lease term and residual value?
Lease terms are between 1-5 years (12-60 months). Used vehicle lease terms are dependant on the vehicle's age and kilometres travelled. Below are the minimum residual values allowable by the Australian Tax Office for new vehicles: FINANCE LEASE
Term Residual Value
12 months 65.63%
24 months 56.25%
36 months 46.88%
48 months 37.50%
60 months 28.13%
What is FBT?
Fringe Benefits Tax (FBT) is applicable to all vehicles under a novated lease. It is calculated on the capital cost of the car and its usage during the FBT year.
The FBT year runs from 1 April to 31 March each year.
The Front Line team can provide information regarding FBT, its
implications and relevant calculations.
How does FBT affect my lease?
Your employer provides you with a novated lease as a benefit in lieu of your salary therefore FBT is payable.
Your employer will normally incorporate the FBT liability into your salary deductions. With every quote we provide an estimate of the FBT applicable to your novated lease.
The following table identifies the statutory percentage bands, as stipulated by the Australian Tax Office (correct as at 1 July 2008), to the corresponding annual kilometres travelled:
0- 14,999 26%
15,000 - 24,999 20%
25,000 - 40,000 11%
40,001+ 7%
Please note actual kilometres travelled will determine the statutory percentage applicable to the FBT calculation.
What is Luxury Car Tax?
Luxury car tax is a tax applied to new vehicles with a value over $57,180. Vehicles over this limit will have the tax included in the purchase price and is included in the calculation of your novated lease.
In addition, your employer cannot claim a tax deduction for depreciation of the vehicle over this limit so an accounting effect on your salary sacrifice may be applied by your employer. This again is
included in the calculation of your novated lease.
12. What happens to my credit application details?
We handle personal information according to a Privacy Policy that is consistent with the National Privacy Principles and legislation. With your credit application, you will also be asked to complete a Privacy
Acknowledgement and Agreement. It outlines the limits the Privacy Act placed on us so far as use of your personal information is concerned.
How do I find out about details such as car services, tyres, etc.?
Following the delivery of your vehicle, you will receive a Front Line Welcome Kit and Driver's Guide, which gives you information and instructions regarding all of the services included in the novated
lease. This includes details regarding maintenance of your vehicle, tyre replacement, windscreen replacement, comprehensive insurance cover, etc.
Can I add items to my car after delivery and have them paid through my package?
No. Once your lease has commenced it will not be possible to add options through your package. If you choose to add options to the vehicle they will need to be done at your expense and paid up front. It is therefore important that you consider all options and accessories you require when requesting a quotation.
How do I pay for fuel?
You will be provided with a fuel card that can be used at any Ampol, Caltex/Woolworths service station with the option of a Shell card that can be used at any Shell and Coles Express petrol outlet and a BP
card that can be used at any BP petrol outlet (unless your employer directs alternative fuel suppliers). Fuel discounts have been negotiated by Front Line and your employer, with the discount then passed on to you. It is essential for accurate reporting that correct odometer readings are provided at every fuel fill
How often do odometer readings need to be reported?
If you have fuel included in your lease you need to give your odometer reading each time you fill up. This ensures that your odometer information and your driver report are as up to date and as accurate as possible. This will help us keep track of your year to date vehicle usage, assist you in achieving your nominated FBT kilometres and keep track of your vehicle running costs in comparison to your budget.
If you do not have fuel included as part of your lease you should update your odometer reading regularly, either through our website or by contacting the Front Line team.
How do I know if I am travelling to budget?
We provide monthly statements detailing actual versus budgeted expenditure including FBT tracking and projection. The data from this report allows us to recommend to you changes to your novated
lease if applicable.
How are trade-in vehicles handled?
When you trade-in your current vehicle against a new vehicle, you must advise us of the proposed arrangements. The purchase of the new vehicle and the trade-in must be treated as separate transactions with the proceeds of any surplus on the trade-in paid by the dealer to you.
Who is eligible for a novated lease?
The eligibility for novated leasing is essentially determined by your employer's policy, however, we will assess and approve your credit application individually before a novated lease can proceed.
If I change employment, can I novate the lease to the new employer?
Yes, provided your new employer signs a Deed of Novation and agrees to our payment terms.
What happens when my lease term expires?
Before the end of the lease, we will contact you to find out whether you want to extend the lease, change over to a new lease or offer to buy the vehicle for the residual value.
What is the Employee Contribution Method (ECM)?
Any after tax contributions you pay towards the costs of running the vehicle reduces the fringe benefit by $1 for every $1 contributed. This may be a tax effective way of packaging where the tax rate you pay on your salary is lower than the FBT rate, which is the same rate as the top tax rate (currently 46.50%).
The employee's contribution may be an amount paid directly by you to your employer for use of the car. This contribution is by post tax salary deductions. You may also make a contribution by paying for some of the car's operating costs (e.g. fuel). In this case you will need to retain a copy of the tax invoices for these costs for future substantiation if requested by your employer or the ATO.
What are the possible risks of novated leasing for employees?
It is important to note that a novated lease is essentially a finance arrangement for the supply of a vehicle and is designed to run for the full lease term.
Some potential risks of taking a novated lease are:
Should the vehicle value be less than the residual value at the end of the lease, you are responsible to pay the difference between the two amounts.
The benefits that exist due to the current tax laws, could be changed during the term of the lease thereby changing the tax effectiveness of a novated lease. Even if the benefits change, you still have a lease arrangement in place with us. The vehicle may be more expensive to operate than was originally estimated. The budget allocation for Car FBT may be less than needed if you travel less than you originally estimated.
When do I get my new vehicle?
Depending on vehicle availability, we can let you know at the before you finalise your order.
How are quotes prepared and supplied?
We’ll need to get some basic information from you first and then, Lease quotes can be supplied to you by fax or email. The turnaround time is normally within 1 business day, however more complex or multiple quotes do take longer than this.
What is my first step?
Contact the Front Line Team on:
P 08 6188 0131
W http://www.frontlinefinancial.com.au
E novatedlease@frontlinefinancial
For tax and accounting related matters we recommend you seek independent advice from an accountant or taxation advisor.
Please check with us first that all the information that we have provided hasn’t been updated or changed.
© Frontline Financial Solutions Pty Ltd.