Fleet Management

Fleet Management Packages for Business

Purchasing a vehicle presents you with many options and decisions on how to finance the purchase in the most tax effective way.

Traditionally, most small business owners have funded the vehicle from the business cash flow or equity then claiming the cost and depreciation of the asset as a tax deduction. This method works well until the business expands needing extra staff, floor space and working capital for stock or other purposes putting constraints on cash flow. You may have also outgrown your old vehicles which may be costing you money to keep on the road.

There is another way to fund your vehicles purchase as an operating lease. This allows you the flexibility to update the vehicle every couple of years. The funding of the vehicle is off balance sheet and fully tax deductible maximising your debt to equity ratio, available cash and business deductions.

Operating Lease

An operating lease is a facility usually leased over a short term in comparison to the life of the vehicle or equipment (asset) where the financier assumes all the risk and benefits of ownership. The cost of usage is calculated in advance, and then leased at fixed monthly payments. At the end of the term the vehicle is returned to the financier without any liability. There may be conditions attached to the acceptable wear and tear including kilometer driven.

Fully maintained operating lease. All the running costs such as registration, service and maintenance, tyres, fuel management and roadside assistance are all included in one lease payment.
Non-maintained operating lease. You are responsible for the maintenance and repairs, while managing your budget with one fixed monthly payment and accessing fleet management discounts with servicing and repairs.
Sale and lease back option. Release the cash locked up in your vehicle or equipment by selling your asset to the financier, then lease them back. Take the asset off your balance sheet and free up working capital for growth or acquisition.

Benefits to your business

Manage your cash flow with fixed monthly payments
Preserve your cash with no capital outlay
All inclusive maintenance costs with fully maintained lease
Lease payments are fully tax deductible
Access to national fleet discounts
Off balance sheet funding

Fleet Management Package for Employees

Having the choice to purchase a vehicle via your salary package allows employees to access their pre-tax salary and reduce their income tax. You can finance both the vehicle cost and the running cost from your pre-tax income and post-tax income for a substantial tax benefit. The running cost is set as a budget and has a benefit for both the employee and the employer.

Novated Leases have been developed to cater to the Fringe Benefits Tax (FBT) laws applicable to vehicle use, where the driver uses the vehicle for business and or private use.

Novated Lease is a three way arrangement between you, your employee and the financier. You take out a lease with the financier then through a navation agreement, your lease is novated to your employer, who them undertakes to meet lease rentals whilst you are employed by the company. Your employer transfers the cost to you through a deduction in your salary. (Your employer collects Fringe benefits tax (FBT) from you pre-tax salary to be passed onto the ATO.

Before committing to a Novated Lease you should consult a professional to advise whether this product is right for you. More information can be found on the ATO website www.ato.gov.au/businesses/content.asp?doc=/content/23465.htm

Or contact our packaging consultant at Accrutus Capital Management for more details on the Packaging Program, what cars can be leased. Reporting, Fringe benefits tax, employee contribution methods and the Novated lease process.

Fleet Management Package for Employers

Salary packaging is a valuable remuneration program to attract and retain top quality staff, to increase morale and allow staff to maximise their pre-tax earnings while legitimately minimising their tax. You do not have to be a large company to offer salary packaging benefits; you may have 2 to 3 employees as there is no cost to administer the program. There is no risk to the company; if your staff leaves, they take the vehicle with them.

Benefits to Employees:

Pay all vehicle expenses in pre-tax dollars
Reduce their taxable income
Access to discounted purchase prices
Discounted rates for servicing, tyres and fuel
Negate Fringe Benefit Tax by using the ECM method
Have choice on the term of Novated lease
Take the car with them when they leave
Use their pre-tax dollars for mortgage or loan payments, school fees, superannuation contributions etc.

Contact Us for more information or telephone Accrutus Capital Management on 1800 692 646 to discuss your Fleet management requirements.