Here answers to our most frequently asked questions.
However ifthere is one not on the list we are always here to help.
The Australian government is trying to increase the take-up rate of electric vehicles by making them more affordable. To do this the Government has changed the Tax Act to make EVs under $84,916, 100% FBT exempt.
What does this mean and how does it compare to Salary Packaging a normal vehicle?
Employees who Salary Package an EV under $84,916 on a Novated Lease are able to pay 100% of the lease costs and all associated running costs including charging, insurance, registration, tyres and servicing before tax, which means they pay no tax, no GST and no FBT.
Prior to this legislation these vehicle attracted FBT (20% of the vehicle value excluding on road costs), which the employee paid in after tax dollars , reducing the tax savings. The new legislation allows employees can pay for the vehicle and running costs pre-tax.
Here’s how it works!
Let’s say your fortnightly gross salary is $3,000. From that $3,000 the ATO deduct $670 in tax (22%) leaving you $2,330 to spend on your living expenses including the vehicle. If you finance a vehicle with a personal/home loan you will be paying this and all running costs from the net $2,330.
The new legislation allows you to Salary Package the finance (a novated lease) and running costs before paying any tax. This means you save 22% tax. Because these payments are salary packaged you don’t pay GST, this automatically saves you an additional 10% (GST) on all vehicle costs.
Thats a 32% saving on your vehicle.
This FBT exemption will apply to battery electric cars, and plug in hybrid electric cars (PHEV’s).
The exemption will be available for eligible electric cars with a first retail price below the luxury car tax threshold for fuel efficient cars ($84,916 for 2022‑23) first made available for use on or after 1 July 2022.
When an employer provides a benefit to an employee in lieu of salary, the ATO regards this as a fringe benefit. They are non-cash benefits provided in lieu of salary or wages. In this context, by paying for your vehicle from pre-tax salary – the employer is providing you with a benefit.
A Fringe Benefits Tax (FBT) is a tax on these on these non-cash (fringe) benefits. It is designed to overcome past deficiencies in the income tax laws which allowed employees to receive part of their salary as tax free non-cash benefits.
FBT is assessed on an annual basis, with the FBT year running from 1 April to 31 March. While FBT is payable by the employer, the costs are passed on to the employee. Salary Packaging companies work this out for you and build the cost into your payroll deductions so you do not have to worry about meeting the expense at the end of each FBT year.
Prior to this new legislation, EV’s were placed in the same list as all other vehicles and when salary packaged on a novated lease before tax, attracted FBT.
The new legislation states that Electric vehicles up to $84,916 retail value will be 100% exempt from FBT.
This means an employee can now salary package via a novated lease the entire lease cost, and all associated running costs before tax and enjoy the entire tax and GST saving created.
Yes, however the legislation states it would need to be a used vehicle under the $84,916 luxury EV limit that was first held and used on or after 1 July 2022.
You have a number of options;
If your new employer does not want to take on your package, we simply cancel your package and you will be responsible to make all required payments in after tax income as you would have without salary packaging.…
| Term | ATO Minimum Residual Value Guideline |
|---|---|
| 12 months | 63.75% |
| 24 months | 52.50% |
| 36 months | 46.88% |
| 48 months | 37.50% |
| 60 months | 28.50% |
Contact Us on 1300 990 880 or admin@vehiclesolutionsaustralia.com.au.
You always have three options;
You have a number of options;
If your new employer does not want to take on your package, we simple cancel your package and you will be responsible to make all required payments in after tax income as you would have without salary packaging.
On signup you will be provided with access to our online management system for 24/7 access to every transaction and every payment. You can view all the payments out of your salary and see all of the payments we make on your behalf to the individual benefit suppliers.
AND
You will always have our head office staff and most importantly your local Manager to provide one on one support to change, move your package to a new employer or cancel your package.
Different employers have different ways to need to treat fringe benefits and therefore have different benefits to Salary Package. Below is a full list of benefits the Vehicle Solutions Australia offer.
Please check with your employer as to what you are entitled to.
A public benevolent institution (PBI) is distinct from a charitable institution. Generally, an organisation is recognised as a PBI if its principal objects are the relief of poverty, sickness, suffering, distress, misfortune, destitution or helplessness, and its activities are carried on without the purpose of private gain for particular people. Employees of a PBI can Salary Package (pre tax payment) up to $15,900 of benefits each FBT year.
PBI Public Hospitals and Ambulance services.
As the name suggests this includes all employees of Public Hospitals and government ambulance services. Employees can salary package up to $9,010 each FBT year.
Different employers have different benefits to Salary Package. Below is a full list of benefits that Vehicle Solutions Australia offer.
Please check with your employer as to what you are entitled to.
Different employers have different ways they treat fringe benefits. This is why some employees can package rent and mortgages and other can’t. Please refer to your employers as to what you can and can’t salary package.
A public benevolent institution (PBI) is distinct from a charitable institution. Generally, an organisation is recognised as a PBI if its principal objects are the relief of poverty, sickness, suffering, distress, misfortune, destitution or helplessness, and its activities are carried on without the purpose of private gain for particular people.
As the name suggests this includes all employees of Public Hospitals and government ambulance services.
Full taxable employers.
This is for the vast balance of employers. Private companies and the balance of government staff outside of the hospitals and ambulance services fall into the full taxable category and as such have no taxable exemptions or rebates under the current ATO FBT regulations. However for employees in this category, salary packaging, motor vehicles and work related expenses generates significant savings.
Our service is easy to establish. Firstly, we work with your payroll and accounts departments to ensure they are familiar with the paperwork and process. This meeting takes about 1 hour and the overwhelming response is how simple the process is and “Why didn’t we do this 10 years ago?”. We then get you to issue our service rollout email to all participating staff. We will take the calls and book either group or individual information sessions. We will answer all questions on Salary Packaging. When a package is established we will issue a simple tax invoice showing the before tax, after tax, GST components, and the total. These funds are simply sent to us and we manage and pay all the vehicle accounts. And at the end of the FBT year we send you a detailed FBT report. Simple.
Our salary packaging service is free for employers, reducing administration. We offer the same efficient service to employers with 5 employees or 24,000 ;
We take away all the administration of a Salary Packaging service allowing you to focus on your business. Our service can also assist your business in removing expensive company vehicles from the balance sheet and the work from your administration team. This frees up staff and money that can be used to expand your business.
A Novated lease is a simple tri-party agreement (Finance Lease and Novation Deed) between the employee, leasing company and employer. Whilst the employee works for the employer, the employer will pay the lease payments from salary sacrificed by the employee (No cost to the employer). As soon as the employment is terminated for any reason the Novation Deed is broken automatically and the employee is completely responsible to pay the lease (remaining finance lease contract) and running costs.
Vehicle Solutions Australia holds a current PI Policy for $10million. This policy covers all staff including contractors.
All of the Vehicle Solutions Australia staff are specifically employed from either the automotive or finance sectors. The owners of the business have over 20 years each of experience in automotive finance and over 15 years of experience in Salary Packaging but most importantly over 40 years of experience in project management. Without this experience we would not have had the opportunity to provide our service to clients such as Northern Territory Government, ACT Government and the 180 plus businesses throughout Australia.
Our success is simple. Get the best new car price that leads to the lowest lease payment. Provide exactly the information a customer wants, in a simple, plain English format. Then save our clients as much money as possible.