A Novated lease is an arrangement between you (the Employee), your Employer and Interleasing (IL) where you can use your pre tax income to obtain a vehicle of your choice.

GENERAL INFORMATION

HOW IT WORKS

You select a vehicle of your liking, contact Interleasing and we arrange a Lease for you that suits your individual requirements.
You, your Employer and Interleasing sign a Deed of Novation and you take delivery of your new vehicle.
Your Employer pays the lease rentals to Interleasing (including the vehicle operating costs) on your behalf as part of your Salary arrangements.
If you leave the company before the lease expires, the Deed of Novation terminates. Your Employer’s responsibility to pay the lease rentals and vehicle operating costs ceases and you become personally responsible for these payments.
During the lease term, your Employer is responsible for the payment of Fringe Benefits Tax (FBT), which is payable to the Government to offset their loss of tax revenue from your salary. The estimated effect of FBT is calculated by Interleasing and is included in the Lease calculations to you.

BENEFITS OF A NOVATED LEASE

Choice

§ You choose the vehicle make and model that best suits your requirements. This can be a family sedan, a recreational vehicle, a sports car, a second vehicle to get you to and from work, etc.

§ You choose how long you want to keep the vehicle for and the number of kilometres you think you’ll travel. Based on this, we’ll prepare a budget for the vehicle.

§ You have the choice of the type of lease that would best suit you. This can be either a Finance or Operating Lease and is further explained in the Lease Options section below.

Control

§ All of your Vehicle Operating Costs are included in the Lease.

§ We set your Budget after consultation with you

§ You control your Vehicle Expenses with our assistance

§ If you choose a Finance Lease, you control the sale of the vehicle at the end of the lease and any profit you make after paying out the residual value is yours to keep, free from tax.

Savings

§ Pre-tax salary deductions reduces your Income Tax

§ We pass on to you the savings we obtain from our buying power for vehicles, fuel and other operating costs

§ All of your Operating Costs are charged to your account exclusive of GST

§ The lease is calculated on the GST exclusive price of the vehicle

§ We offer a ‘One Stop Shop’ facility to take care of all of the vehicle and lease negotiations, which saves you money, time and convenience

Flexibility

§ If your personal circumstances change, we can amend your Lease structure to best suit you

§ Through a Finance Lease, should there be significant changes to the cost of your operating costs, eg Fuel, we can amend your Lease to ensure you are not disadvantaged

Service

§ We treat you like you’re our only customer.

§ Fully trained, experienced, professional consultants guide you through the Lease set up process

§ Experienced, professional maintenance controllers ensure you are not overcharged for maintenance at the time of servicing.

An Interleasing Novated Lease package can provide you with an after tax benefit. The amount of this benefit is largely determined by your personal financial circumstances and vehicle usage. We recommend you seek independent professional financial advice regarding the effectiveness of salary packaging a vehicle for you.

LEASE OPTIONS

Interleasing provides two lease options, Operating Lease or Finance Lease.

§ Operating Leases have no end of term residual; any future liability lies with Interleasing. You simply return the vehicle at lease end with no further obligations (subject to fair wear and tear and excess kilometres).

§ Finance Leases have a pre determined residual value, as agreed between Interleasing and yourself at the beginning of the lease. At the lease end, you may make an offer to purchase the vehicle, for the residual value. However, there is a risk that the vehicle may be worth less than the residual value and you may incur a loss.

Choose:

§ Operating lease when you do not want the responsibility of vehicle disposal at lease end.

§ Finance lease when you wish to purchase the vehicle at lease end.

WHAT IS INCLUDED IN MY LEASE?

The Interleasing Novated Lease enables you to salary package motor vehicle costs into a single monthly payment.

Interleasing offers three Vehicle Package Products:

§ Fully Maintained Operating Lease

§ Fully Maintained Finance Lease

§ Full Budget Finance Lease

Products and Services	Fully Maintained Operating Lease	Fully Maintained Finance Lease	Full Budget Finance Lease
Included in Funded Cost (financed)
Finance	Fixed	Fixed	Fixed
Lease Protection	Included	Included	Included
Initial Registration	Included	Included	Included
Purchase Stamp Duty	Included	Included	Included
Automatic Contract Inclusions
Repairs and Maintenance	Fixed	Fixed	Budget
Tyre Replacement	Fixed	Fixed	Budget
Registration & CTP Renewals	Fixed	Fixed	Budget
Insurance Renewals	Budget	Budget	Budget
Emergency Assistance	Fixed	Fixed	Fixed
Administration	Fixed	Fixed	Fixed
Fuel - Card	Budget	Budget	Budget
Replacement Vehicle	Fixed	Fixed	Fixed
Lease Protection Insurance	Fixed	Fixed	Fixed
Reporting	Fixed	Fixed	Fixed

Lease Product Features

§ Fixed - Interleasing bears the risk of increasing costs to the vehicle or its components. You are only liable for increased usage (on a cents per kilometre basis).

§ Budget - Interleasing will reconcile the actual cost to the budget on an annual basis and any significant variation may require a re-write of the budget or a reconciliation and payment at lease end.

§ Included – The cost is included with the vehicle value for financing. These are automatic inclusions.

VEHICLE SELECTION AND SOURCING

We can assist you with sourcing the vehicle of your choice and arrange test drives and demonstrations through our Australia wide dealer network.

Interleasing consultants can provide advice on:

§ Pricing

§ Vehicle options

§ Availability

§ Projected future vehicle values

§ Vehicle running costs

§ Trade ins and vehicle disposal

Our buying power allows us to obtain significant discounts from retail prices and ensure vehicle availability in most circumstances. Any vehicle that has been selected through our dealer network will be delivered on time, with a full tank of fuel and will be the most current vehicle model available.

You still have the option of choosing your own dealer, if that is your preference. Understandably though, we can make no guarantees on the quality and age of the vehicle or whether it will be delivered on time with a full tank of fuel. These negotiations and arrangements would be your responsibility.

WHAT VEHICLE CAN I LEASE?

You can choose the vehicle (make, model and year) to be leased, including:

§ New vehicles

§ Second hand / used vehicles (from a dealer, auction or privately)

§ Your current vehicle, financed at the current market value

§ Personalised vehicles with the types of additions you desire.

There are no limits on the purchase price (subject to your Employer policy), provided you can meet the financial commitments of the lease and associated running costs. The only restrictions in vehicle choice are:

§ Vehicles in excess of one tonne carrying capacity, such vehicles fall outside the definition of “car” for FBT purposes. You should check with your Employer to determine whether they will permit you to package these vehicles.

§ Vehicles without an Australian Compliance Plate

§ Motorcycles – they fall outside the definition of "car" and are excluded.

§ Vehicles that will be older than 7 years at the end of the lease.

WHAT ARE THE FINANCE LEASE RESIDUAL VALUES?

There are specific guidelines for Residual Values on Finance Lease set through legislation. We recommend that you select the lowest allowable residual value to minimise the possibility that the value of your vehicle at lease end is less than the residual amount.

Lease Term (Years)	Tax Office Minimum Residual %	General Maximum Residual %
1	65.63%	70%
2	56.25%	60%
3	46.88%	50%
4	37.50%	40%
5	28.13%	30%

HOW LONG CAN THE LEASE GO FOR?

Standard lease terms are between 12 and 60 months, however in certain circumstances lease terms can vary from the standard. At the end of the lease term, options are available to extend the lease for periods of 3 months to 24 months.

TAX INFORMATION

FRINGE BENEFITS TAX (FBT)

Fringe Benefits Tax (FBT) on a Novated Lease is calculated using the Statutory Formula Method.

The Statutory Formula Method is based on the kilometres travelled during the FBT Year (1^st April to 31^st March). The first calculation within the Statutory Formula Method is to calculate the Taxable value of the vehicle. The taxable value of the vehicle is a percentage of the vehicle’s base value. This calculation is:

A x B x C – E

Where: A = the base value of the vehicle

B = the Statutory Percentage

C = the number of days during the FBT year the car Fringe Benefit was provided

D = the number of days in the FBT year

E = the amount of post tax dollars the employee pays toward the operating costs of the vehicle

The table for the Statutory Percentage is as follows:

Kilometres per annum	Statutory Percentage
0 – 14,999	26%
15,000 - 24,999	20%
25,000 - 40,000	11%
40,001 and over	7%

Calculation of the Taxable Value of the vehicle

A = $30,000 (Price of vehicle ex reg & stamp duty)

B = 20% (Assume travelling 20,000 kilometres)

C = 365 days (Available for the entire FBT year)

D = 365 days (A full FBT Year, not Leap Year)

E = No Employee Contributions

Taxable value = $30,000 x 20% x 365 - $0.00

365

Taxable Value = $6,000

Once the Taxable value of the vehicle has been established, the remainder of the Statutory Formula is applied. This is:

Taxable Value x Gross Up Factor x FBT Rate

From above example: $6,000 x 2.0647 x 46.5%

= $5,760.51

Once the estimated FBT liability is established, the cost is added into your Salary Package for payment. This ensures that providing you achieve your nominated kilometres, the FBT liability will be fully funded for your employer from your package.

Apart from the above method of payment of the FBT liability, you have the option (subject to your employer’s policy) to use the Employee Contribution Method (ECM). This is further explained in the following section.

It is very important to note that you need to ensure that your estimate of the number of kilometres you will travel is as accurate as possible. The impact of not achieving your required kilometres can be substantial and your employer would expect that you pay them any shortfall in FBT that may be established.

The other important matter to note is that the FBT year operates between the 1^st of April and the 31^st of March of the following year. The FBT year is not from the date of delivery of your vehicle. As a result, in the first FBT year that you have the use of the vehicle, your kilometres are calculated on a pro rata basis.

As an example:

Lease Start Date: 1 October 2005

Days remaining in FBT year: 182 (Assuming non Leap Year)

Estimated Kilometres: 25,000

Required kilometres travelled to 31/03: 12,466

Employee Contribution Method (ECM)

The Employee Contribution Method (ECM) enables an employee to reduce their FBT liability by making post tax contributions towards the operating costs of the vehicle.

The recommended method is to contribute an amount equivalent to the Taxable Value of the vehicle thereby reducing the Taxable Value to zero. Providing you travel your nominated kilometres, this reduces the FBT liability to zero.

A common question that arises regarding the ECM method is “Why would I want to make after tax payments towards my vehicle when the idea of Salary Packaging is to reduce my Gross Salary and therefore pay less income tax?”

The simplest answer to this is that by making a payment after tax toward the running costs of your vehicle, you can reduce the rate at which you pay FBT from 46.5% to your income tax rate, which in many cases will be no more than 30%. As a result, this can reduce the overall cost of salary packaging your vehicle and therefore enhance the total tax benefits available to you.

As per the Statutory Formula Method, it is very important to note that you need to ensure that your estimate of the number of kilometres you will travel is as accurate as possible. The impact of not achieving your required kilometres can be substantial and in the case of ECM would establish an FBT liability that your employer would expect that you pay them.

We will assist you throughout the FBT year to keep track of your kilometres and keep you informed of what you need to achieve by the 31^st of March. Toward the end of March, we will send you a Vehicle Declaration form where you will be asked to declare your odometer reading as at the 31^st of March. This is a Statutory requirement from the FBT legislation.

For any further queries relating to FBT, you can contact your Interleasing consultant and he/she will be able to handle your query.

WHAT IS THE EFFECT OF GST ON A NOVATED LEASE?

GST is payable on the sale of a new and second hand vehicles, with the exclusion of private sales. What occurs with a leased vehicle is that it is sold to Interleasing and we then lease the vehicle on to you.

We pay the full amount of the sale price of the vehicle to the supplier who then pays the GST component of the vehicle to the ATO. As GST cannot be paid twice on the same transaction to the ATO, we can claim the GST component that we have paid to the supplier back from the ATO. The refund of the GST is known as an Input Tax Credit (ITC).

As a result of the claiming of an ITC, we lease to you the vehicle at the full sale price less the GST component, if applicable. The ITC is capped to a maximum amount of $5,182.64.

In addition to the GST on the sale price of the vehicle, GST is payable on your Lease and Operating Costs including:

§ Lease Rental

§ Fuel

§ Maintenance

§ Tyres

§ Insurance

§ Management Fees

§ Sundry Expenses

Through an Interleasing Novated Lease, the GST on these Lease and Operating Costs are refunded back to you. As a result, your Interleasing Novated Lease is exclusive of GST.

GST will only become payable when:

§ You cancel the lease contract and continue to pay the lease.

§ A lease is terminated early; this applies to both Operating Leases and Finance Leases (including residual values).

§ End of lease Residual Value payments (Finance Lease only).

INSURANCE INFORMATION

WHAT CAR INSURANCE DO I NEED?

It is mandatory that your vehicle is Comprehensively Insured at all times throughout the Lease period with Interleasing noted as the financier.

You have 2 options available to you for the inclusion of Comprehensive Insurance with your Novated Lease and Salary Package. These are:

Use the Interleasing Insurance program, which is underwritten by Lumley General Insurance.
Use your own insurer’s program.

Should you elect your own Insurance cover, it will be your responsibility to ensure the vehicle is comprehensively insured at all times and it must be arranged prior to delivery of the vehicle. A copy of the insurer’s Certificated of Currency must be provided before delivery. You will be responsible for payment of the renewal notice and requesting a reimbursement from us of the cost incurred, subject to available funds.

Our leasing consultants will discuss in detail the options available to you prior to preparing your Novated Lease quotation.

IS THERE ANY LEASE PROTECTION INSURANCE?

We have negotiated with Swann Insurance, part of the global IAG Insurance group, the insurance facility to protect your Lease.

This insurance provides protection for you from ongoing costs associated with a lease, due to the unforseen event of employment termination, through Involuntary Redundancy or Retrenchment.

In the event of employment termination through the above circumstances you may elect to do one of the following:

§ Return the vehicle to us where it will be sold and any shortfall between the Lease payout figure and the vehicle sale price will be paid by the insurer, or;

§ Retain the vehicle and the Insurer will pay us the equivalent of one lease rental every month for a maximum of 5 months and up to $15,000 whichever is the lesser.

When we provide you with an Interleasing Novated Lease quote, we will provide you with a Product Disclosure Statement (PDS) specific to Lease Protection Insurance. This document provides you with full details of the Insurance coverage and conditions and is also available on request.

Our leasing consultants will discuss in detail the options available to you prior to preparing your Novated Lease quotation.

LEASE MANAGEMENT

HOW DO I PAY FOR FUEL AND HOW IS IT CALCULATED?

After the delivery of your Leased vehicle, Interleasing send you a Starcard to use for any fuel purchases. This can be used at any Ampol, Caltex or Woolworths/Safeway fuel sites.

Interleasing has negotiated a national fuel purchase agreement with Caltex and Ampol that offer attractive discounts at over 2,000 retail sites Australia wide.

These discounts are reflected in the cost of fuel to your Interleasing Novated Lease and you can monitor this through your monthly statements.

Budgeted fuel usage will be provided in the vehicle package and is calculated by:

Formula Fuel Price x Fuel Consumption x Annual KM’s

100

Fuel Price Cost in Cents per Litre (estimated average over lease life)

Fuel Consumption As displayed on vehicle (plus 10%)

The odometer and fuel readings collected from the fuel data allow us to report to you the difference between the budget fuel amount and actual usage. It also assists us to monitor your FBT liability.

If actual costs vary significantly from budget, we will notify you and your employer and arrange the appropriate budget modifications. This provides you with the most cost effective means to control Fuel Costs and your employer with a simplified approach to payroll deductions.

HOW DO I HAVE MY VEHICLE MAINTAINED?

Maintenance is the Scheduled and Unscheduled repairs to a vehicle and do not include the costs associated with the restoration or rebuilding of a vehicle.

Our extensive network of maintenance facilities allows us to:

§ Negotiate substantial discounts on labour rates and spare parts

§ Ensure that only the required maintenance work is completed by the service provider, therefore preventing the completion and charging of unnecessary maintenance

§ Enforce and extend warranty claims

§ Accurately forecast service and maintenance costs, which are factored into lower monthly charges

§ Offer a broad repair and service network to minimise inconvenience when vehicle servicing is required

§ Ensure the use of like-for-like manufacturers specified parts thereby protecting the future value of your vehicle

These factors, combined with the use of our approved repairers, prevent over servicing whilst maintaining vehicles to a high standard, thereby protecting the employee’s investment in the motor vehicle.

HOW DO I ARRANGE FOR MY TYRES TO BE REPLACED?

Our policy regarding tyres is that in order to maintain consistency, performance and safety, we require ‘like for like’ tyres to be fitted. The cost of Tyre replacements is calculated using this method.

Under a Full Budget Lease, you can nominate the tyre make and type however the cost for these will need to be taken into consideration in the quote. You can also nominate the tyre make and type after delivery and an adjustment can be made to the Full Budget Lease.

Our nominated tyre supplier is Bob Jane T-Marts. Should they not stock the required tyres, you will be able to contact us directly for assistance.

HOW DO I HAVE MY REGISTRATION & CTP RENEWALS PAID?

An Interleasing Novated Lease includes the cost to renew registration and CTP insurance in the monthly lease amount. In states where CTP can be purchased separately, our buying power can achieve very competitive rates.

We identify upcoming registration and CTP renewals well in advance of their due dates and arrange renewal. However it is your responsibility to ensure that the vehicle is registered at all times.

With a Finance Lease the vehicle is registered in your name however the postal address will be ours. With an Operating Lease the vehicle is registered in our name and the postal address is also ours.

This ensures that the Registration Renewal occurs in the most efficient manner. After renewal, the current Registration label is mailed to your home address.

Should we receive parking or traffic infringements for your vehicle, we will have these redirected to you for payment. Fines and infringements are not considered by the ATO as a vehicle operating cost and as such are not able to be part of the Novated Lease.

WHAT DO I NEED TO DO IF I NEED TO REPLACE MY WINDSCREEN?

Should you select our Comprehensive Insurance offer, one windscreen per year is incorporated into this coverage and is excess and cost free.

Should you select your own Comprehensive Insurance cover, you will need to investigate windscreen coverage directly with the insurer.

Should you break or damage your windscreen, our supplier is O’Brien Glass

AM I ABLE TO TRANSFER MY LEASE TO A NEW EMPLOYER?

Yes, Interleasing can arrange for a Deed of Novation to be signed with your new employer provided they agree to our standard documentation.

CAN I ADD ANY ACCESSORIES TO MY CAR AFTER DELIVERY?

It is very important that you establish the options and accessories you require prior to the establishment of your Novated Lease. By doing this, all options and accessories can be funded as part of the Lease and the correct calculations are made for Fringe Benefits Tax.

You are not able to claim a reimbursement from your lease for any options and accessories as the ATO do not deem them to be Operating Costs.

Your Interleasing consultant can provide you with guidance on this matter.

WHAT HAPPENS IF I DON’T TRAVEL MUCH FOR BUSINESS?

The FBT Statutory Formula Method doesn’t require you to differentiate between Business and Private kilometres. In fact, it assumes that all the kilometres you travel are for Private purposes.

HOW WILL I KNOW IF I AM OVERSPENDING MY BUDGET?

A standard feature of a Interleasing Novated Lease is that you will be provided by e-mail each month a detailed report that shows you:

- Actual expenditure vs Budget

- Details of actual expenditure on Fuel & Operating Costs

- Your current and estimated FBT kilometre position

- FBT Budget vs Projected FBT Liability

Should any of the above be significantly out of balance, Interleasing will make contact with you directly to determine whether a Lease modification is required or whether the outcomes are a result of unusual vehicle expenses and usage.

CONTACT INTERLEASING

HOW DO I CONTACT INTERLEASING?

To discuss any aspect of the Interleasing Novated Program or to obtain a tailored Lease Quote, please contact one of our Lease Consultants by any of the following:

Telephone: 1800 980 500

Fax: 02 8899 4874

E-mail: motorvate@interleasing.com.au

Once you have established direct contact with one of our consultants, that person will be your individual contact throughout the entire Lease set up process.