SMB Fleet Management

SMB Fleet Management
SMB Fleet Management
Insurance-BRISBANE, QLD
Insurance-Brisbane, QLD
Australia’s novated lease is a three-way contract between an employer, his employee and a third party leasing company. The lease means that the employee leases a vehicle but does not have to..
Level 30/ AMP Place, 10 Eagle St, Brisbane, Qld, 4000.
Level 30/ AMP Place, 10 Eagle St, Brisbane, Qld, 4..
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Australia’s novated lease is a three-way contract between an employer, his employee and a third party leasing company. The lease means that the employee leases a vehicle but does not have to pay for it. The employer is financially responsible for the vehicle and usually pays for it by deducting the money from the employee’s gross income. A novated lease is also known as salary packaging and is explained further here. Technical details can be found here.
There are three types of novated lease agreements. A novated finance lease means that the employee simply leases the vehicle. A fully maintained novated lease refers to leasing the vehicle along with taking care of the costs of running it. Lastly, a fully maintained novated operating lease is a lease that not only refers to the vehicle and its running costs, but also means that risk is assumed by the leasing company. The latter two are generally managed by third party leasing companies.

There are several benefits for all involved when taking on a novated lease in Australia. Employees have the potential to save a lot of money in income taxes, get to help make the decision about the type of car they want to drive and have the option to keep the car and transfer it to a new employee should they leave the company. The employer can use the salary packaging to increase the salaries of his employees without costing the business too much money and they do not have to assume risk like they would if working with a fleet of company cars. The government and lease providers also benefit by being paid to be a member of a government panel and earning money by providing services for a commission.

Often referred to as FBT, the Fringe Benefit Tax is imposed on non-cash benefits that employees receive from employers. The tax first came to be in 1986 with the release of the Fringe Benefits Tax Assessment Act of 1986.

In the FBT Act, the employer is the party that is responsible for paying the taxes. An employee under the Fringe Benefit Tax is described as anyone that does work for the employer, has worked for the employer in the past or intends to work for the employer in the future.

There are several types of benefits that are taxed under FBT, including company cars, loans that the employer gives to the employee and housing provided by the employer. The Australian government uses several different methods to determine the gross value of a benefit that is taxed under the Fringe Benefit Tax. Once the gross value of the benefit is decided, it is taxed at 46.5 percent. This is the combination of the highest income tax rate (45%) plus the Medicaid levy (1.5%). Like most tax acts, there are some exemptions to the Fringe Benefits Tax Act. Some examples of exemptions include expenses that the employer pays to relocate the employee and expenses for work-related items such as uniforms, tools and mobile phones.

Some employers prefer to use something called a salary package. Salary packaging means that the employer will offer the employee benefits in exchange for reducing the employee’s salary. This option saves the employer money in income taxes. Additionally, even though they are still responsible for paying the Fringe Benefit Tax, they spend less money since they are paying out less to the employee in actual salary.

Even though the employer is the one that pays a Fringe Benefit Tax, the employee must still report it on their PAYG statement if the benefits exceed $2,000. Despite the requirement to report the benefits, the employee will not be responsible for paying any taxes on the items.

The Fringe Benefit Tax is calculated at the the end of the FBT year, which occurs on 31 March each year.
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