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What Is A Novated Lease? How Does This Benefit The Company And Its Employees?

Aug 20th 2015 at 12:04 AM

Leasing can be defined as an agreement between two parties wherein which the lessee takes on a long-term debt from the lessor to acquire or buy something of great value. It is a means that people usually go for in order to buy (in most cases) a vehicle or a home. This is actually a good thing because it allows the working person to acquire or buy something of great value and be able to pay for it in installments over time. And another good benefit of doing this is that, the person will be able to get what they need right away without needing so create a separate savings account for it which might otherwise be spent on other things somewhere along the way.

But how does this work and what exactly does this do you might ask? More commonly, this is sued as a means for the employee to get a vehicle with the company he or she is working for as being the party to pay for the vehicle lease. A good benefit from this kind of leasing is that is that the company will be paying for the lease with a set amount taken from the employee's salary, and this is usually taken from the salary before the taxes come in. This means that the employee will actually be taxed less and will in a way have a bigger salary. And this makes it a very good benefit for the employee.

The benefits that a company can have by having this kind of leasing deal is that they can offer their employees to purchase a vehicle of choice instead of having a company car. With a business being free from providing company cars, they would also be free of having to spend a lot of funds on the maintenance of the vehicles. Another thing that makes this good for a company is that, with the vehicle being the property of the employee themselves, the employee will be the one responsible for all maintenance on the vehicle.

Furthermore, a novated leasing deal in the salary package will mean that the money that the company will have to shell out for will be minimal to none at all because all of the expenses will be shouldered by the employee. And the leasing deal can still be in effect even if the employee decides to leave the company, or is relieved from his or her position.

Companies that do include this kind of leasing in their salary packages can have a more attractive offer to get the best kind of people working for them because it can be a good incentive that can make the employee do better at what they do.

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