Novated Leasing and Petrol
One of the most attractive benefits of a novated lease is the inclusion of petrol in your repayment sums. As long as you have a fully maintained novated lease, you’ll be entitled to a free petrol card.
What’s so great about this?
First and foremost, it means you’ll always be paying the same amount each month despite the rise of petrol prices. No more avoiding filling up on days where petrol prices are at their highest or going out especially on days when petrol is the cheapest. The higher petrol goes, the more you save.
Have a think about how much you currently spend on fuel.
Or, take this for example:
Say petrol is being charged at $1.20 per litre (we wish). Say you have to fill up a 60 litre tank. That’s going to cost you $72 out of your post-tax income. So might have had to earn $105 to have paid for that tank of petrol.
Under a novated lease agreement you don’t pay GST on fuel, you get a fleet discount with your fuel card, its paid for with your pre-tax income and there is no FBT on fuel so for the same tank of fuel you only need to earn $64.20. This means you’ll be saving $40.80 every time you fill up your car. That sounds pretty good to us.
But Your Car Has Great Fuel Economy?
In our experience, it’s best to always take the manufacturer’s reported fuel economy with a pinch of salt. At least with a novated lease you’ll know for sure exactly how much you’ll be paying regardless of how much petrol costs and how much petrol your tank actually needs.
So How Does it Work?
As part of your repayment package, you’ll receive a fuel card which you’re entitled to use at any participating service station. Simply swipe your fuel card, no need to use your own debit or credit cards and you’ll be on your way. The fuel provider receives the payment from your novated lease provider.
What if I use more or less fuel than I originally estimated when setting up the lease?
With a novated lease you only spend what you use, so if you don’t use all the fuel you budgeted for this is recredited back to at the end of the lease. Alternatively you can recalculate the lease at any time to bring it back into balance. However, if you use more fuel than you budgeted for you may need to recalculate you lease up to account for the additional cost.
Lastly, have a look at the above example visually with this 59 second video on our Youtube channel