Staff rewards and bonuses have received media coverage recently. With large, publicly listed organisations, executive bonuses are quite a contentious issue at any time, let alone at coronavirus time. But for smaller, privately-owned businesses, that level of public scrutiny over how they say thank you to their staff doesn’t exist. Traditionally for many businesses, the end of the year represents bonus time. Employers reward staff with a little or a lot extra in a pay rise, bonus or something special for Christmas. For some that might mean the annual ham for others, it may be way more significant.
2020 is not a normal year. Most businesses have suffered to varying degrees as a result of COVID-19, but they still need to retain and motivate staff for the rebound and recovery. Have you considered rewarding key staff with a new car? What, you’re saying? How can I afford that? With assistance from Jade Car Loans, that’s how. With wage growth low, interest rates at record lows and significant tax incentives on offer for asset acquisitions, including hire purchase cars, the idea may not seem as left-field as you think. We work through some finance options available to provide vehicles for employees.
The Classic Company Car
The ‘company car’ is seen as a great perk for staff and considered by some employees such as reps, as standard to their salary package. The company purchases and owns the vehicle, covering all the expenses while the employee has full use of the vehicle during their employment. When they leave the job, you keep the car to provide for their replacement.
The finance scenario is currently quite favourable for this type of vehicle acquisition:-
- Instant Asset Write-Off and temporary full expensing allow eligible businesses to receive the tax benefit in this current year when purchased under the appropriate finance deal.
- If IAWO places the business in a loss position for 2019/20 they may be eligible to claim that loss against earlier year profits under the loss carry back measures.
- Interest rates are at record lows so Jade can access even cheaper car finance deals.
- Use of the vehicle for private purposes may be subject to FBT which should be taken into consideration
To take cumulative advantage of these measures, Jade Car Loans can offer great Chattel Mortgage vehicle deals, including options tailored for car loans for sole traders. This finance type allows the business to depreciate the vehicle under IAWO or full expensing measures and claim the full amount of GST on the vehicle at the time of purchase.
Check out all the details of Chattel Mortgage on our website or just give us a call for a quick quote.
An alternative to the business providing a fully-funded car to a staff member is the option of the employee contributing to the purchase of the car. Jade Car Loans can arrange this with a Novated Car Lease with Salary Sacrificing finance.
With this type of finance both the employee and employer benefit from the arrangement.
Novated Car Leasing with Salary Sacrificing Quick facts:-
- The employer and employee agree that the employee will sacrifice part of their salary to go towards the costs of the employer essentially buying a car for them.
- The employee selects the car they want so they have the choice of vehicle.
- The employee ‘novates’ or transfers the obligation of the lease to their employer.
- Your Jade consultant arranges a leasing finance deal with one of our lenders.
- The employer covers the costs of the lease payments and ongoing costs of running the car.
- The employer receives the usual tax benefits associated with car leasing by way of tax deductible monthly lease payments etc.
- The employee contributes pre-tax income to cover the costs which may put them in a lower tax bracket and reduce their income tax obligation. If they were to receive a pay rise in line with the same amount so they could purchase a car privately, that may place them in a higher tax bracket.
- Business car loan rates are lower than for personal car loans so the employee can effectively achieve a new car at lower interest rates than if they purchased it with a personal loam
- At the end of the lease term, when the residual is paid out, the ownership of the car is transferred wholly to the employee.
Your Jade consultant can explain all this in greater detail to cover any queries you may have on this type of finance.
Better Bonuses with Better Car Loans
With Jade’s better interest rates, cheap car loans, and even options for a no doc car loan, it could be time to ditch the cliché bonuses and rewards and surprise your staff with a new car this Christmas-New Year. The end of the year always represents a rush to get new car deals done before the traditional Christmas-New Year shutdown. Jade can act quickly to sort your motor vehicle finance and we’ll liaise with the dealer to ensure prompt settlement to suit your planning.
To discuss finance options for staff vehicles, contact Jade Car Loans at 1300 000 003
DISCLAIMER: ALL INFORMATION PROVIDED IN THIS ARTICLE IS INTENDED AS GENERAL INFORMATION PURPOSES AND NOT AS AN EXCLUSIVE OR SOLE SOURCE FOR MAKING FINANCIAL DECISIONS. INDIVIDUALS SHOULD SOURCE INDEPENDENT ADVICE FROM A FINANCIAL ADVISOR IF THEY REQUIRE SPECIFIC DIRECTION IN RELATION TO THEIR CIRCUMSTANCES. CONTENT MATERIAL, DATA, SPECIFICS, PRODUCT FEATURES AND OTHER INFORMATION ARE SOURCED FROM A RANGE OF SOURCES AND NO LIABILITY IS ACCEPTED FOR ERRORS OR MISINTERPRETATIONS OF SUCH DATA.