The novated leasing landscape has changed with the FBT rate increasing to 20% and contributions becoming post-tax. The product remains popular but relies on favorable tax treatment which could change under future governments. While novated leasing companies have diversified models, they remain at risk from dealer resistance and market changes impacting resale values. However, the future may see aggregation of novated fleets and a shift to usage-based models like car clubs as younger drivers prioritize access over ownership. Telematics and fleet management also promise to disrupt traditional novated leasing.
1. KEY POINT: Can be a
Finance Lease or
Operating Lease.
KEY POINT: A salary
packaging product that’s
available to most employees.
KEY POINT: Funding,
Management and
Maintenance can be
split.
NOVATED LEASING, post
Rudd
Topic:
2. Why should I care?
• The landscape has changed…. I’ll give you a
snapshot .
• What happens if a One Trick Pony dies?
• Where is the product headed?
3. The Landscape has changed….
….the old
- More KLMs
less FBT
- At 40,000+
pay 7%
- Cost or
Statutory
- Overestimate
deadly
- Adelaide and
back
….the new
- 20% FBT
fraction
- Not KLM
based
- Post tax
contrib.
- Urbanites win
- Broader user
base
- Charity/Govt
5. Only slightly sick…
The whims of government policy dictate the fortunes of the listed
car-leasing sector, which operates under constant fear of a
destructive revision of the favourable — and, arguably,
anachronistic — car fringe benefits tax regimen.
6. Near death experience…
• Recap
6
Lest we forget, resurrected PM Kevin Rudd
proposed to change the rules that in effect
limited the car FBT concession to actual
business usage. But he didn’t win the
election and with the Coalition supportive of
the status quo, the idea lapsed.
7. What’s wrong with my Pony?
While their business models vary, the companies clip the ticket
with interest margin on funding, maintenance and re-marketing
the used clunkers, administering the packages or broking
commissions from third-party funders. {The Australian 13/3}
8. Lets remember….
For the potential REWARD - $$$, there is risk.
- Dealers see novated as foregone retail sale.
- A lease is a lease , is a lease. Times are tough.
- Resale values , don’t buy pink… grey imports.
- Its still worth it if you are careful.
9. ARE
CHANGES
EXPECTED?
• Morgan Stanley says: “We believe the
market is ascribing too high a probability for
a major change to FBT legislation — that is,
one that would end novated leasing .”
• There’s a residual concern the issue
eventually will be readdressed — either by a
reinvigorated Turnbull government or after an
against-the-odds Labor win.
# with every aspect of tax reform supposedly on the table, the purists
argue why car perks should be concessionally taxed. {The Australian 13/3}
• Remember
– Going, going,……..
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10. The Future… • Views expressed are
my own……the Government will
change it, slowly
…the benefits of bulk
buying and co-ops easier
via Internet
…rise of the aggregator
…disruptive trends
…young drivers
disassociated
…car clubs, self drivers,
Uber
…and finally
my crusade…Fleet
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11. We need new ways
GEN Y EXPECTATIONS
OWNERSHIP IS NOT A
KEY
RETAIL
EXPERIENCE…TOASTER
FUNDERS EMBRACE
TELEMATICS
FLEET MANAGEMENT
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