There are 4 areas where the GST has an impact when packaging your car using a novated lease.
When you elect to package a car with an nlc novated lease, nlc purchase the car.
nlc is able to claim back the GST associated with the purchase of the car and will pass that credit back to you as a saving.
Therefore the impact of GST on the purchase price of the car is a saving to you as you will only be financing the GST exclusive price of the car.Top
All of the running costs associated with the car you package with an nlc novated lease are paid for on your behalf by your employer.
Your employer will deduct these costs out of your salary. This means your employer is paying for all the running costs of your car; finance, registration, insurance, fuel, maintenance, tyres and your carbon offsets.
If your employer is able to claim back the GST associated with those costs and your employer policy states that they will provide that GST credit back to you as a saving, then the impact of GST on your running costs will be a saving.
However if your employer does not wish to pass the GST credits back to you, or they are not able to claim back the GST credits from the ATO, you will be paying for your running costs inclusive of the GST.
Please check your employer's salary packaging policy to find out more about how your employer treats the GST relating to a Novated Lease.Top
If your taxable salary is under the top rate of pay in the PAYG tax brackets, under $180,001, it is more than likely you will be using the Fringe Benefit Tax Statutory Employee Contribution Method to pay for your car packaging.
When using this method, a Post Tax Deduction is used to negate the FBT associated with the salary deductions.
The ATO considers this deduction as "supply" therefore it attracts the GST.
Therefore your Post Tax Deduction are GST inclusive.Top
At the end of your lease term you pay a Residual Value payment.
The Residual Value once paid provides you with ownership of the car that you have been leasing from nlc.
The Residual Value payment is paid by you and not your employer, so it is not a salary deduction. You pay the Residual Value with your post tax salary.
Therefore your Residual Value payment is GST inclusive.Top