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Packaging a car within your salary package provides the biggest tax break. Paradigm
allows you to include a new or used car in your salary package through a novated
lease arrangement. Salary packaging a novated lease enables you to save money (via
income tax and Goods and Services Tax) because car lease and running costs are paid
using your pre-tax salary
Car running costs you can salary package!
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Car items
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Pre-Tax
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Additional Savings
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Buying your car
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Discounts on the purchase price of your car
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GST
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GST is returned when salary packaged
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Fuel
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Access to discounts on fuel
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Service and Maintenance
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Fleet discounts for maintenance
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Tyres
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Discounted tyre replacement
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Insurance
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Benefit from group insurance
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Registration and CTP
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Car wash and detailing
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Road Service
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Salary packaging a car
You agree to package a $25,000 car over 4 years, travelling 25,000kms per Fringe
Benefits Tax year (to 31 March of each year). An amount is packaged from your pre
tax (gross) salary resulting in a lower income tax deduction as the income tax is
based on your new (lower) gross salary.
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Without Packaging
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With Paradigm Packaging
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Gross salary
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$60,000
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$60,000
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Less car packaging
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$0
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$11,781
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New GST returned
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$0
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$1,071
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New gross salary
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$60,000
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$49,290
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Estimated Income tax
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12,690
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$9,376
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After tax car payments
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$14,530
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$2,750*
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Disposable income
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$32,780
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$37,164
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Extra money in your hands each year: $4,384
*Salary packaging a novated lease will generate a FBT liability from the day the
car is picked up; however the FBT can be eliminated or reduced by making an after
tax contribution, which is a salary deduction from your after tax income.
According to the Australian Taxation Office (ATO), the following types of vehicles
(including four-wheel drive vehicles) are cars:
- motor cars, station wagons, panel vans and utilities (excluding panel vans and utilities
designed to carry a load of one tonne or more)
- all other goods-carrying vehicles designed to carry less than one tonne, and
- all other passenger-carrying vehicles designed to carry fewer than nine occupants.
Restrictions on the age and value of your car do apply:
- Cars need to be 8 years old or under at the end of the novated lease term;
- Unless allowed by your employer, the car purchase price excluding on road costs such as purchase duty and vehicle registration should be no more than $57,466 including GST. Cars over this amount will incur Luxury Car Tax.
Paradigm does not salary package motorcycles as they are excluded from Australian
Tax Office salary packaging offering.
An experienced Paradigm Consultant will manage the entire novated lease process
for you.
Click here to see an
example of the tax savings!
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