Division of Finance - Charles Sturt University

Salary Packaging

Novated Leases (Cars)

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General Information

How the lease works
What happens when the lease is completed?
Steps to organise a Novated lease
How are the payments calculated and deducted from salary?
Who do I contact for more information?
Running Costs
Finance on the Vehicle
Fringe Benefit Tax (FBT)

FleetPartners are the Novated Lease suppliers to the University. A Novated lease is a three-way arrangement between you, CSU and FleetPartners. By way of a novation agreement, the University undertakes to meet the lease rentals whilst you are an employee.

How The Lease Works…

The employee chooses a car and leases it from FleetPartners.
The employee then novates the lease to their employer, who assumes all the employee’s rights and obligations under the lease, including responsibility of meeting the lease rentals. CSU recovers the rental payments and Fringe Benefits Tax payments from the employee’s pre-tax salary.
The contract is in the name of the employee who remains the registered owner throughout the lease and keeps effective control of the vehicle at all times.
If the employee leaves the company, the vehicle remains with the employee. In this situation generally the employee takes over the payments or gets another employer to make the payments.

The lease consists of three parts: running costs, finance on the vehicle and fringe benefits tax (FBT).

What happens when the lease is completed?

The employee can payout residual and own the vehicle
The employee can send the car back to FleetPartners (will be sold through wholesale auction, any difference in the sale price and residual is responsibility of driver)
Re-lease the car (take another lease on same car at new finance amount). Note: 4 full FBT years must pass before the FBT value is reduced, i.e.; original FBT value applies for the first 4 years of the car.

Steps to organise a Novated Lease

Select a vehicle make, model and accessories
Carefully estimate annual km’s
Choose a lease term
If choosing own insurance, obtain a quote from insurance company to include with lease.
Driver can choose any car and any accessories. FleetPartners will source new cars and negotiate on the drivers behalf.
Driver can nominate the local dealer if preferred.
FleetPartners will allow the lease of 2 nd hand vehicles. The driver must source car, negotiate price and obtain a quote from the dealer. DO NOT SIGN A COMMITMENT to buy – FleetPartners will purchase the car if the application is approved.
Call FleetPartners Driver Liaison 1300 88 22 66 for a quote
FleetPartners will provide a detailed quote via email within 48 hours. Includes running costs budget, fuel etc
If driver wants to proceed, call driver liaison and accept the quote. FleetPartners will forward novation agreement and finance application.
Driver completes all paper work and returns to FleetPartners for approval. CSU only need to see one form – quote requisition is signed by authorised person in CSU Finance to confirm driver is eligible staff member. All other documents are confidential to driver and FleetPartners.
If application is successful, FleetPartners advise driver and vehicle is ordered.
When vehicle is delivered, FleetPartners provide notification and a payroll deduction authority is completed.

How are the payments calculated and deducted from salary?

Contributions commence in the next available pay period after the lease has been finalised and the vehicle delivered.
Lease payment deductions are the pre-GST monthly amount divided by 2. When there are 3 pays in the month the deduction is turned off (to balance monthly invoice)
Invoices are for complete months. If deductions commence in 2nd pay of the month, payroll may leave deduction record active for next period of 3 pays in month to make up for the missed payment at the start of the lease.
FBT is calculated and deducted fortnightly. (not switched off when there are 3 pays)

If I have any other questions who do I contact?

Fleerpartners Contacts

FleetPartners Driver Liaison Services Staff:1300 882 266
CSU Remuneration Staff: salpack@csu.edu.au

Running Costs

These are budgeted expenses. FleetPartners calculate the running costs for the specific car, the km’s travelled and the length of the lease (as the car gets older it requires different types of maintenance).
Running Costs includes: fuel (issued with a fuel card); rego; tyres; maintenance and insurance (note: - the generic FleetPartners policy is quoted unless otherwise specified).
Drivers can bring their own insurance through any company – in rural areas it is often cheaper than the generic policy. The policy is paid up front by the driver and a reimbursement claim sent to FleetPartners.
Drivers are responsible for the differences in budgeted vs. actual costs. At the end of the lease the budgeted costs are reconciled against the actual costs. Drivers receive either a refund or a bill for the difference. The differences are processed through taxable salary.
Quarterly statements detail the actual costs and comparison to budget. Budgets can be adjusted via a lease recalculation if large variances occur that are unlikely to be absorbed.

Finance on the vehicle

The equity that drivers accrue in the car is through a finance arrangement with FleetPartners, they offer the finance via the ANZ bank (parent group of FleetPartners) at the daily rate that the bank offers them which is normally very competitive.
At the end of the lease, there is a residual value that is payable to own the car outright.
The residual value is a % of the FBT capital value (the purchase price + fitted accessories + dealer delivery charges, all GST inclusive). Registration and stamp duty charges are not included in the capital cost of the vehicle.
Residual value % is determined by the term of the lease. FleetPartners use ATO safe harbour thresholds:

12 Months	65.5% of the vehicle purchase price
24 Months	56.25% of the vehicle purchase price
36 Months	47% of the vehicle purchase price
48 Months	37.5% of the vehicle purchase price
60 Months	28.25% of the vehicle purchase price

These residual values apply to ALL cars – vehicle selection is important when looking at depreciation.

Fringe Benefits Tax (FBT)

This is the only option in the CSU salary packaging scheme that involves Fringe Benefits Tax (FBT). FBT is concessional and the rate is determined by the number of kilometres travelled each FBT year.
FBT year is 1 April to 31 March. This part of the lease is reconciled each year.
The FBT is a % of the FBT capital value (see above) and the rate is determined by the number of km’s travelled per FBT year.
For part FBT year, km’s are annualised (eg car taken in October at 25,000 km’s per yr must do approx 12500 by 31 March following year)
FBT Bands:

Less than 15 000	26.00 %
15 001 to 24 999	20.00 %
25 000 to 40 000	11.00 %
Over 40 000	7.00 %

Bands are absolute , eg; if you budget for 25,000 and only do 24,995 – the entire FBT liability is calculated at the higher rate and must be recovered via payroll deduction by the end of the financial year (the June immediately after the 31 March FBT year).
The lease can be recalculated by FleetPartners if circumstances change and greater of lesser km’s are likely to be standard.