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Associated Lease
Employees may package a car benefit by way of an associate lease. An associate lease is where a spouse, relative (over 18 years) or trust entity in which you are a beneficiary has a vehicle registered in their name and then novates the car to the employer for use by you or an associate. An associate lease is packaged identical to a novated lease, however, usually there is no GST on the reimbursement installment amount and consequently the employer cannot claim input tax credit, therefore the costing is slightly different to a novated lease.
The prime reasons for opting for an associated lease is where the employee has received proper financial advice as to merits of income splitting and there is an advantage for both the employee and spouse. The ATO requires the associate to have registered for an Australian Business Number and to submit to Income Essentials a copy of the Notification.
Associate lease rentals are paid as taxable income to the associate, who can claim interest and depreciation expenses as deductions against the income.
The same kilometre brackets and statutory fraction percentages will apply for an Associate lease.
* Novated Lease
* Associate Lease
* Motor Vehicle Operating Costs
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"An Associate Lease is a form of income splitting. Income Essentials will determine the lease amounts and set up the contracts in accordance with ATO guidelines."
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