Remunerator News

Nov 9 2018

The car you already own is the best one to Salary Package

Novated lease car – check. The other Car in the driveway eating away at your life savings – check.

Is the car in your driveway costing you more than it should? We can fix that with an associate lease.

What is an associate lease?

First of all, the name is misleading, there is no additional finance involved. Unfortunately it is the name that has just stuck.

The best scenario is the car owned outright, however it still works even if the car is already financed.

Essentially it is an arrangement where an ‘associate’ of the employee (e.g. spouse, family member or family trust) owns a car and leases it to you (the employee) on a fully maintained basis. As with the Novated Lease, the reduced income tax is more than offset by the small amount of FBT paid. FBT is based on the value of the car. For existing cars this is their trade-in value.

How do I save through an associate lease?

Just like a Novated Lease, car payments and all running costs are then deducted from the employee’s pre-tax salary. This means you save on tax on running costs. On top of that you are reducing your taxable income when your deductions are made.

Here’s an example:

An employee packages the car they own valued at $15,000, travelling 20,000 kms per year over a lease term of 3 years.

The annual running costs of the vehicle are:

  • $800 registration
  • $1,400 insurance
  • $4,000 fuel
  • $1,500 services, repairs and maintenance

On top of your savings from an associate lease, the ‘associate’ is receiving an income and can depreciate the value of the car progressively, against his or her own tax, over the life of the lease.

Associate leases work with all cars. The older the car the better since FBT is calculated on the market value of the car.

It may sound a little complex (we don’t blame you) but the savings are real!


Contact us now and get the most out of the car you already own.

1800 501 703  |