Who can benefit from a Novated Lease?

Through the fully outsourced Rewards Novated Lease program, the benefits of vehicle salary packaging can now be extended beyond senior management to a broader range of employees, including those in lower salary bands.

Employees who currently receive a tax-free car allowance or the use of a company vehicle may still benefit by participating in flexible salary packaging program by including a vehicle for use by their spouse or partner.

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What should I do before I proceed?

You should be able to answer the following questions:

• Does my employer allow participation in salary packaging?
• Do I have the appropriate approvals in place from my employer?
• Have I decided on my preferred vehicle (make and model)?
• What vehicle options or accessories do I require?
• How many kilometres will I travel each year?

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How do I request a formal quotation or submit an application?

Your Rewards consultant will provide a quotation for your selected vehicle.

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When should I start this process?

Vehicle delivery times may be up to three months, depending on your vehicle selection, therefore you should commence the process as soon as possible.

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What vehicle choice do I have?

The Rewards program does not impose any restrictions. However, some employers have policies that specify certain types of vehicles.

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Can I lease a second-hand vehicle?

The Rewards program is ideally suited to new vehicles or used vehicles up to 4 years.

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Can I source my own vehicle quotation?

Yes, you may source your own vehicle quotation from your preferred dealer.

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What lease term can I choose?

Lease terms range from 12 to 60 months. Terms for used vehicles will be determined by the age and kilometres travelled.

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What residual value will apply?

Your residual value is set with full regard to relevant rulings by the Australian Taxation Office (ATO).

When you have selected a vehicle, your Rewards consultant will recommend an appropriate residual value for that vehicle depending on expected usage. If you are uncertain about how these arrangements will affect your position, we recommend that you obtain independent financial advice.

For more information about residual guidelines visit http://www.ato.gov.au/

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How does Fringe Benefits Tax affect my lease?

Madison can provide you with an estimate of the FBT applicable to your lease using the statutory cost method.

Please note actual kilometres travelled will determine the statutory percentage applicable to the FBT calculation. If you are uncertain about how these arrangements will affect your position, Rewards recommends you speak to your employer and obtain independent financial advice.

For more information about Fringe Benefits Tax (FBT) visit http://www.ato.gov.au/

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What happens to my credit application details?

Your personal information is handled according to our Privacy Policy and is consistent with the National Privacy Principles. With your credit application, you will also be asked to complete a Privacy Acknowledgement and Agreement. It outlines the limits the Privacy Act places on Rewards so far as use of your personal information is concerned.

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Do I need to insure my vehicle?

Yes, you will need to provide evidence of insurance before the vehicle is delivered to you.

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Who is responsible for the payment of insurance renewals?

You will be responsible for ensuring insurance cover is renewed and that evidence of renewal is provided to Rewards before the expiry date. Reimbursement is available from Rewards on proof of payment.

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Who is responsible for the payment of registration renewals?

You will be responsible for the payment of registration renewals as they fall due. Where registration is included in your lease, Rewards can assist with the payment of your registration renewal.

Should you select to pay the registration renewal, reimbursement is available from Rewards on proof of payment.

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Can I add items to my car after delivery and have them accommodated through my package?

Once your agreement has commenced it will not be possible to add options through your package. If you choose to add options to the vehicle they will need to be done at your expense and paid up front. It is therefore important that you consider all options and accessories you require when requesting your Rewards Novated Lease quotation.

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How do I know if I am travelling to budget?

Rewards provides quarterly statements detailing actual versus budgeted expenditure including FBT tracking and projection. This allows you to review your nominated usage against any FBT liability.

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What happens if I go on unpaid leave (e.g maternity leave, extended leave)?

If you take any period of extended leave or unpaid leave before the novated lease expires, you and your employer will need to decide what is to happen about the salary sacrifice that has been negotiated. If it is decided your employer will repudiate the novated lease, as provided for under the novation agreement, Rewards will send you a notice of termination and, thereupon, you will be personally responsible for all future lease rentals plus GST and duty. However, you may not be entitled to an Input Tax Credit for the GST.

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If I change employment, can I novate the lease to the new employer?

Yes, provided your new employer has a Rewards Novated Lease facility and agrees to the Novation Agreement.

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What happens when my lease term expires?

Before the end of the lease, Rewards will contact you to find out what you want to do about the vehicle and, without commitment, any offer you make at that time to re-lease or purchase the vehicle will be considered.

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How do I recover the monthly lease payment from the employee?

Every lease expense item can be fully recovered from the employee’s salary. When an employee chooses to participate in salary packaging of a Novated Lease, we will forward a Payroll Advice summary to your payroll contact. Payment of the monthly lease is monthly, but the Payroll Advice summary can be displayed in weekly, fortnightly or monthly format.

The Payroll Advice summary displays payments into three amounts. A pre-tax salary sacrifice, a post-tax employee contribution and a GST Input tax Credit (ITC).

The monthly lease deduction remains constant over the duration of the lease unless there is a significant change in the actual running costs compared with the original budget.

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What happens if our employee overspends on their novated lease budget?

If a significant variance begins to develop in the budgeted running costs the employee is asked to recalculate their lease budget and modify the deficiency.

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What happens if the employee leaves?

Your employee's lease is fully portable, so if they leave, the lease leaves with them too. We recommend that their final pay is held until their novated lease account can be reconciled.

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