What is Employee Contribution Method (ECM)?

Sure, if you’ve organised your own Roadside Assistance, make sure you contact them directly to fully understand their policy as it may not cover the life of your novated lease, and contact them in the event of a breakdown.

A novated lease allows you to reduce your taxable income, therefore reducing your PAYG income tax. To offset some of this reduction in income tax, the Australian Tax Office (ATO) levies another tax called FBT on the novated lease that your employer provides to you.

The amount of FBT levied on your novated lease is calculated using the statutory formula method and is mainly determined by the value of the car you choose to package. A novated lease is tax effective because in most cases, your income tax savings will be greater that the FBT payable on your car.

If your taxable salary is less than $180,000 per annum, Lendly will structure your salary package using a combination of pre and post-tax deductions. The post-tax deductions are used to offset the FBT liability payable on the car. This method of salary packaging is called the Employee Contribution Method (ECM) and Lendly will calculate the ratio of pre and post-tax deductions to offset your FBT liability and maximise your PAYG income tax benefit.

The residual value is the amount that remains owing on your car at the end of the lease contract, including GST. Minimum residual values are set by the ATO (Australian Tax Office).

Once the term of the lease has expired you’ll need to pay the residual value. You also have the option to re-finance the lease for a further term.

Under ATO (Australian Tax Office) guidelines, the following items cannot be included under your novated lease:

• Road tolls and e-TAG expenses
• Fines and other infringement notices
• Any accessories fitted to the car after purchase, e.g. tow bar, roof racks, etc
• Hire car and associated expenses including fuel
• Stamp Duty

Lendly’s Roadside Assistance is available to all of our novated customers. When you’re stuck on the side of the road, rest assured you have someone to call, 24 hours a day, 7 days a week, nationwide. Need roadside assistance? Call 1800 225 111

The first thing you need to do is check with your employer. You don’t have to earn a huge salary or use your car for business for it to be worthwhile. When you call us, your dedicated consultant will provide you with an individual benefit assessment based on your specific situation, to work out how much you can save.

Once you enter into a finance lease with Lendly, a second document called a novation agreement is used to transfer your lease obligations to your employer. Under the novation agreement, your employer deducts a set amount from your salary (split into pre-tax and post-tax payments) and remits the money to Lendly to pay for your car’s running costs as they fall due.

Unless otherwise stated by your employer, you are able to choose any car, any make, any model Australia wide. You can also choose from:

• A second-hand car (there may be minimum value guidelines, usually more than $10,000;
• A new car (our buying power will ensure you get the best possible price); or
• A “Sale and Lease Back” of the car you currently own.

Always talk with your employer first to check if there are any limitations. If you are still unsure or have any questions, just give us a call.

A novated lease is a car finance option that allows you to treat your personal car like a company car. It’s a three way agreement between you, your employer and Lendly. As one of the most cost-effective car ownership options for Australians, it allows you to access income tax and GST savings through your employer, as well as extra fleet discounts and the ease of having a fully-maintained car with Lendly.

Tax Savings – You can access significant income tax savings by paying for some of your car’s running costs from your pre-tax income through your employer. When you buy your car from a registered dealer you’ll also save the GST on the purchase price, as well as the GST on your running costs (subject to your employer’s salary packaging policy).

Car Purchase Savings – At Lendly we get you the best pricing on your new car purchase and the best value for your trade-in. You can also choose to novate a used car or the car you currently own, as well as novate a second car if you choose to increase your savings.

Running Cost Savings – Let us take care of your servicing and repairs by monitoring and billing suppliers directly for all work done on your car. Our expert team of qualified mechanics help you avoid over-servicing and over-charging, and get you access to fleet discounts on parts and labour.

Convenience – Enjoy the convenience of using your Lendly fleet card, accepted at over 1,800 fuel locations across the country and more than 3,500 merchants including car manufacturer dealerships, tyre, wheel and battery specialists, as well as major franchise and independent repairers.

Under a novated lease, you agree to forgo a portion of your salary to cover your car’s running costs, some of which you can pay for in pre-tax dollars. At Lendly, we then use your regular salary deductions to pay for your cars running costs on your behalf. This includes finance, insurance, registration, fuel, servicing and tyres, which makes running your car much easier and more affordable.

The residual value is the amount that remains owing on the car at the end of the lease contract including GST. Minimum residual values are set by the ATO (Australian Tax Office). Once the term of the lease has expired you’ll need to pay the residual value. You also have the option to re-finance the lease for a further term.

A novated lease includes all of your car’s major running costs, including:

• Lease finance
• Comprehensive insurance
• Registration
• Fuel Maintenance including, servicing, tyres and repairs
• Roadside Assistance