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In today's competitive job market, attracting and retaining top talent is a significant challenge for employers. To stand out as an employer of choice, many organisations are exploring creative and attractive benefits packages. One such option that has gained popularity is the novated lease car arrangement. This unique employee benefit offers a host of advantages for both employers and employees. In this blog, we'll delve into the benefits of novated lease car arrangements for employers, and how they can help you secure and retain the best talent.
A novated lease is a three-way agreement between an employer, an employee, and a finance company. The employee leases a car of their choice, and the employer agrees to make lease payments by making deductions to the employee’s salary, which will be a combination of before-tax and after-tax, depending on the private use of the vehicle. This arrangement allows the employee to enjoy the benefits of the vehicle while also reducing their taxable income.
Below are some of the benefits of offering a novated lease to your employees:
1. Attract and Retain Top Talent
Offering a novated lease car arrangement can significantly enhance your attractiveness as an employer. For many job seekers, this benefit can be a decisive factor when choosing between job offers. In a survey by Mercer, a global human resources consulting firm, it was found that 76% of employees consider company cars a valuable benefit.
By offering novated lease car arrangements, you demonstrate a commitment to employee well-being and comfort, which can help you win the talent war.
2. Tax Savings for Employees
One of the primary advantages of novated leases is the potential for significant tax savings for employees. Since lease payments are made at least partially and in some cases completely from before-tax income, employees can reduce their taxable income, resulting in lower overall tax liabilities.
By using a novated lease, an employee can acquire a vehicle without paying GST (Goods and Services Tax) related to purchase price (up to a maximum saving of $6,191 for FY24). This can be a substantial financial benefit, making it easier for employees to afford the vehicle of their choice.
3. Flexible and Customisable Packages
Novated lease car arrangements are highly flexible and can be tailored to meet the specific needs of both employers and employees. You can offer a variety of car options and financing plans, allowing your employees to choose the vehicle that best suits their preferences and lifestyle. Additionally car running costs can be included in the package, this means that not only the lease payments but also expenses like fuel, maintenance, and insurance can be covered. By bundling these costs into a single payment, employees can better manage their budget, while employers can provide a comprehensive benefit package without the need for additional administration.
4. Simplified Administrative Process
Managing a novated lease program doesn't need to be a cumbersome task for employers. Many companies offer comprehensive novated lease management services that take care of the administrative work, leaving you with more time to focus on your core business activities.
5. Employee Satisfaction and Engagement
Offering novated lease car arrangements can have a direct impact on employee satisfaction and engagement. When employees feel that their employer is investing in their well-being, they tend to be more committed, motivated, and loyal. This, in turn, reduces turnover rates and the associated costs of hiring and training new employees.
Novated lease car arrangements can be a game-changer for employers seeking to attract and retain top talent. This benefit offers financial advantages for employees, enhances productivity, and contributes to a positive work environment. By demonstrating your commitment to employee well-being and satisfaction, you can position your company as an employer of choice in a competitive job market. So, if you're looking for a way to stand out and secure the best talent, consider adding novated lease car arrangements to your benefits package.
Do you think novated leasing could be a good addition to your employee benefits? Our team can help with introductions to providers who can take the hassle out of novated leasing.