Where this sort of lease truly shines is if you’re keen on an EV or PHEV, because those FBT savings add up. Tax breaks are only useful if you use them!

2024-04-16 12:20:48

Operatingleasesareapopularchoiceamongbusinesseslookingtoleasevehiclesfortheiremployees.Thistypeofleaseoffersflexibility,withtheoptiontoupgradetoanewvehicleattheendoftheleaseterm.OneofthemajorbenefitsofanoperatingleaseisthepotentialtaxsavingsthatcanbeachievedthroughFringeBenefitsTax(FBT)benefits.

FBTisataxthatemployerspayoncertainbenefitstheyprovidetotheiremployees,includingvehicleleasing.Whenitcomestooperatingleases,theFBTliabilityisgenerallylowercomparedtoowningavehicleoutrightorusingafinancelease.Thisisbecausethetaxablevalueofthebenefitisbasedontheleasepayments,ratherthanthevalueofthevehicle.Thiscanresultinsignificanttaxsavingsforbusinesses,makingoperatingleasesanattractiveoptionforcompanieslookingtoprovidevehiclestotheiremployees.

Wherethissortofleasetrulyshinesisifyou’rekeenonanElectricVehicle(EV)orPlug-inHybridElectricVehicle(PHEV),becausethoseFBTsavingsaddup.TheAustraliangovernmentofferstaxbreaksandincentivesforbusinessesthatuseenvironmentallyfriendlyvehicles,suchasEVsandPHEVs.BychoosinganEVorPHEVthroughanoperatinglease,businessescantakeadvantageofthesetaxbenefitsandreducetheiroveralltaxliability.

Inadditiontotaxbenefits,operatingleasesalsoofferotheradvantagesforbusinesses.Theseincludefixedmonthlypayments,reducedmaintenancecosts,andtheabilitytoupgradetoanewvehicleattheendoftheleaseterm.Thiscanhelpbusinessestobettermanagetheircashflowandbudget,whilealsoensuringthattheiremployeeshaveaccesstoreliableandsafevehicles.

However,it’simportanttonotethattaxbreaksareonlyusefulifyouusethem.Inordertomaximizethebenefitsofanoperatinglease,businessesneedtocarefullyconsidertheirleasingoptionsandchooseavehiclethatalignswiththeirneedsandgoals.ByselectinganEVorPHEV,businessescannotonlysaveonFBTcosts,butalsocontributetoamoresustainableandenvironmentallyfriendlyfuture.

Inconclusion,operatingleasescanbeasmartchoiceforbusinesseslookingtoleasevehiclesfortheiremployees.WiththepotentialfortaxsavingsthroughFBTbenefits,aswellasotheradvantagessuchasfixedmonthlypaymentsandreducedmaintenancecosts,operatingleasesofferaflexibleandcost-effectivesolutionforbusinessesofallsizes.BychoosinganEVorPHEVthroughanoperatinglease,businessescantakeadvantageoftaxbreaksandincentives,whilealsopromotingsustainabilityandreducingtheircarbonfootprint.Whetheryou’reasmallbusinessoralargecorporation,anoperatingleasecouldbetherightchoiceforyourvehicleleasingneeds.