Salary packaging is a legitimate way to bring money around the tax man, reducing the amount of tax you pay on certain items such as rent, mortgage, novated and associate leases. An associate lease is a fantastic option if you already own a car and want to reduce the amount of tax you pay.
An associate lease is an arrangement between the employer, employee and the employee’s associate. An associate is someone you know and trust (usually a spouse, family member or friend) who are then able to lease their car to you and have the running costs of the car either fully maintained or maintained by the associate (meaning that the costs for servicing, fuel, registration, insurance etc are either included in the lease or the associate covers these costs out of their pocket). The associate also needs to have or establish an ABN.
An associate lease is slightly different to a novated lease, being that the financier is replaced with an ‘associate’.
The benefits of doing an associate lease is that the car does not require any finance or banks to be involved, and can be on a car you already own or have a personal loan on (with no age restrictions on your car), but still want to benefit from the tax advantage through salary packaging your car.
Associate leases are a great idea if your associate has no income or a lower taxable income then you, as the lease payments are made to them. Associates may need to pay tax if they earn over the minimum tax threshold or pay extra tax if the lease payments to them push their income to the next tax bracket.
An associate lease is a fantastic way of saving money on tax by paying for the running costs of your car with a combination of before and after-tax pay, which then reduces your taxable income.
The running costs that can be claimed on an associate lease include your fuel, services, tyre replacement, registration and insurance, as well as car detailing, roadside assist and window tinting.
Associate leases can go from 1 year to 5 years, and can have multiple vehicles on a lease at the same time. At the end of a lease, you can choose to re-lease the car for an unlimited amount of times. If you decide you want to sell your car to end the lease, you can at any time with no additional fees.
If an associate lease is something that you think you can benefit from, please get in contact with one of our Salary Packaging specialists today to generate a quote for you today.