Maximising Staff Retention and Tax Benefits with Novated and Associate Leases
In today’s competitive job market, attracting and retaining top talent is essential for business success. Employers are constantly seeking innovative ways to enhance employee benefits while optimising their own tax savings. Businesses are increasingly turning to novated leases, associate leases, and given the recent FBT exemptions – electric vehicles (EVs). Let’s explore how these financial arrangements can benefit both employers and employees.
Novated and Associate Leases: A Win-Win Solution
Novated and associate leases provide employees with an attractive incentive by enabling them to lease vehicles with pre-tax dollars. This translates to increased take-home pay for employees, as lease payments are deducted before tax is applied to their income. The arrangement also benefits employers, who can offer an enticing staff retention tool without incurring additional expenses.
An often-misunderstood notion is that novated and associate leases only benefit those on high income’s – this is absolutely not the case and in-fact the majority of salary packaged vehicles are for employees earning <$80,000.
The largest tax benefits are seen when either;
- The vehicle is a low cost vehicle;
- The vehicle is an electric vehicle under $89,332 (2023-2024);
- The vehicle has high business use.
Tax Savings Amplified with Electric Vehicles
Electric vehicles offer a double dose of tax savings for employees through novated and associate leases. Not only do they reduce taxable income under the lease, but employees are also eligible for a reduced FBT rate on electric vehicles due to recent government initiatives.
Enhanced Staff Retention and Attraction
Novated and associate leases, coupled with the allure of electric vehicles, make for a compelling employee benefits package. Offering these options not only fosters staff loyalty but also aids in attracting top talent in the competitive job market. Employees appreciate the financial perks and environmentally friendly aspects, making them more likely to remain committed to their current employer.
Managing novated and associate leases has become easier with technological advancements. Many leasing companies offer user-friendly online platforms that simplify the administration and reporting processes for both employers and employees. Furthermore, the costs of administering these leases is usually passed on to employees as part of their package, meaning there is no cost to employers.
Novated and associate leases, alongside the FBT exemption for electric vehicles, present a compelling proposition for businesses seeking to optimise tax savings and staff retention efforts.
Call our team today for individually tailored advice.