NSP SALARY pACKAGED
An effective income splitting strategy
Ideal for partners that have more than one car
top 4 benefits
- Higher income earner (employee) reduces their TAX
- (Associate) receives profit – INCREASING family income
- CONVERTS the CAR/s INTO AN income earning ASSET
- zero cost to the employer to set up and maintain
For Examplebased on a pre packaged income of $45,000 & marginal tax ate of 31.5%
$40,000 car owned by associate
$3,400 pa. running costs paid by associate
$15,000 pa. lease payments paid to associate
16,000 kms pa – all private travel
After-tax salary deduction required to ensure no FBT= $40,000 x 20% - $3,400 = $4,600
Lease income $15,000 Running costs ($3,400) Depreciation ($5,000) Net taxable income $6,600 (no tax due to low income offset)
Therefore, net cash position = Lease income $15,000 Running costs ($3,400) Net cash $11,600
Steps to arranging an Associate Lease
- We will need to ascertain if an Associate lease is the right solution and will be beneficial for your situation. We will ask you some questions to see if you qualify and if we believe that it is the right move forward we will provide you with a quote, showing you the estimated tax savings and income that your Associate will be receiving.
- Either in person or over the phone, we gather the necessary information from you to begin the process.
- One of the requirements is to have an ABN – We can assist with applying for an ABN for your associate (if required).
- Another requirement is for the Associate to have a separate bank account to the employee
- At this point, administration documents will be drawn up and sent to you.
- Once you have completed, please return them to us for processing.
- Your employer provides final authorisation for packaging to commence.
- At this stage, you are sent an email outlining your tax savings and which payroll date your packaging will begin.
Our team can assist you in all areas involved in setting up your Associate Lease, including obtaining an ABN and answering any questions you or your Associate may have
NSP Manages all the DEDUCTIONS
As part of the Salary Package, NSP manages all relating to the running of the vehicle which expenses which the Associate will be able to claim back all the deductions.
What can be included:
- Fuel. For convenience, you will be provided wit a fuel card. (we have partnered with a company called WEX Motorpass. You can use this card for discounted, fuel, services, parking, tyres, car washes etc. We will provide you with the list of Auto retailers to receive those discounts.
- Services and Maintenance
- Comprehensive Insurance
- Excess on Insurance
- Other types of Insurance relevant to the vehicle (eg: Tyre & Rim, Gap and more)
- Roadside Assistance
- Paint Protection
- Rust Proofing (non-removable)
- Window Tinting
- Car Washing and Detailing
- Protection for Fabric Interior (non-removable)
- Damages or Rep
Yes. In fact by having both you increase the remuneration of your salary by a significant amount of money
20% of the car base FBT value is assessed for car FBT.
Generally no. Employees earning under $180,000 will mostly make an after-tax payment to eliminate the car FBT. The salary package structure is usually both after-tax and pre-tax salary sacrifices.
Yes. GST is payable by the employer on the after-tax component paid to the employer. Therefore one eleventh of the after-tax amount is added to the pre tax salary sacrifice component.
Spouse, partner, sibling, parent, child over 18, family company or trust.
Spouse/partner has an existing car that is owned or financed. Employee needs a replacement car, and the spouse/partner will buy and register the car. The employee cannot be the registered owner.
No, but the associate must have an ABN and an individual (not joint) bank account.
Yes. The odometer reading at the start date of the Associate lease is needed, also on March 31 each year, or when the lease is terminated as a result of the employee leaving, lease expiring, car total loss or early payout.
No. The associate in an associate lease arrangement claims 100% of any car cost loan interest, plus depreciation on non-luxury cars (under $57,581 until 30.06.2018).
The factors are the car purchase price, lease term, the ATO minimum residual value percentages, and a commercial simple interest rate of return for the associate, given the associate is taking the residual risk. These rentals are not “a dart at the board” but are calculated on a completely commercial basis.
As the lease is an operating lease, there is no residual payable. The associate, if he or she has borrowed to buy a car, may have a balloon payment at the end of the car loan, but this will usually be lower than the amount of any Novated Lease residual plus GST.
No. The associate must have created taxable income, and to have had a positive cash flow from paying any car loan repayments, after receiving the associate lease rentals.
Traffic fines, parking fines, road tolls, bridge tolls, driver’s licence