Blog & Updates

A revolutionary way to save thousands on a car!

Author: Barry Scott / Published Date: 21 August 2014

Categories: Team Updates, Events, Consultancy

Go Drive Business is a groundbreaking car ownership program that saves sole traders, professionals, business owners and company directors thousands of dollars, an unbelievable amount of time, and takes care of all the complicated tax issues at EOFY.

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We even absorb the variability of costs, flattening them into one set monthly expense to help you manage your cash flow.

Buy One phone call is all it takes:
        - Fleet discounts on purchase price
        - Vehicle selection advice and depreciation modelling
        - Finance and tax strategy to maximise deductions

Run One set monthly cost for:
        - Fuel, finance, insurance, registration & CTP
        - Discounted servicing, tyres & repairs
        - 24/7 Emergency support
        - Discounts on servicing, tyres & repairs
        - Intelligent Tax Pack (EOFY & FBT)

Sell We even help you sell the vehicle:
        - No nonsense valuation
        - Convenient pick-up service

- Find out how it all works here
- Click here and we'll call you back whenever it's convenient
- Call 1800 288 674 and find out how easy it is to save thousands now
- Download: 'The Essential Guide to Car Finance'



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Superannuation increase and its effect on Employees, and Salary Packaging Cars

Author: Barry Scott / Published Date: 9 July 2013

Categories: Novated Leasing, Consultancy, The Autopian

Extract from:
The Autopian | Winter 2013 Sign up here
Leading edge commentary on the vehicle benefits industry


The 2013 Federal Budget announced two changes that will indirectly influence salary packaging - the increase of the superannuation guarantee and the Medicare Levy. Here's how:

Impact of super increases on novated leases

The compulsory superannuation guarantee rate used to be 9%. On 1 July 2013, it increased to 9.25%. Should Australia have a Labor Government post September this year, the rate will gradually increase to a compulsory 12% by 1 July 2019. If we have a Liberal Government, the 12% rate will be reached two years later in 2021.

Year
Labour
Liberal

1 July 2012

9.00%

9.00%

1 July 2013

9.25%

9.25%

1 July 2014

9.50%

9.25%

1 July 2015

10.00%

9.25%

1 July 2016

10.50%

9.50%

1 July 2017

11.00%

10.00%

1 July 2018

11.50%

10.50%

1 July 2019

12.00%

11.00%

1 July 2020


11.50%

1 July 2021


12.00%


So what effect will this have on salary packaging?
Firstly, let’s reflect on what this means to employees in general.

Award employees: For employees covered under an Award, employers must bear the cost of the increased superannuation rate. This means that as superannuation contributions increase, so too does their total package. Taxable income, tax payable and disposable income remains unchanged.

‘Fixed remuneration’ employees: For employees paid a fixed remuneration package, superannuation balances will increase, and this will be funded out of their existing total package. The result of this will be a decrease in taxable income, tax payable and disposable income.

‘Base + super’ employees: For employees paid a base salary plus super, employers will need to choose whether the organisation, or the employee, funds the superannuation increase.
- Where the employer funds the increase, there is no impact on the employee’s taxable income, tax payable or disposable income.
- Where the employee funds the increase, again this will be afforded through the employee’s existing total package. The result of this will be a decrease in taxable income, tax payable and disposable income.   

Effect of Super Increase on Remuneration
 
Award employees
Fixed remuneration employees
Base+ Super employees

Who covers
the increase?


Employer


Employee

Employer
or employee


Superannuation balances

 

 

Increases

 


Increases

 


Increases


Taxable income


No change


Lower


Lower (employee bears cost)


No change (employer bears cost)


Tax payable


No change


Lower


Lower (employee bears cost)


No change (employer bears cost)


Disposable income


No change


Lower


Lower (employee bears cost)


No change (employer bears cost)


The new reality

A significant segment of the Australian work force is going to be funding the super increase out of their existing remuneration package. While a lower level of tax payable is always welcome, it's not usually associated with lower disposable income, as is the case now. Depending on the outcomes of your organisation’s annual remuneration review, employees may not immediately realise the negative impact on take home pay.

Inevitably though, they are set to face the challenge of making their diminished disposable income stretch further than it had to in the good old 9% days.

Sign up to The Autopian for more on the Medicare Levy Increase and its influence on novated leasing.

Doing more, with less
Employees will not be the only group faced with this challenge. HR departments will be under increasing pressure to alleviate the pain outlined above – and they’ll have to look for the means to improve their overall employment offering, without having the luxury of splashing the cash around.

The key is that employees’ disposable income is going to decrease, and so the desire to squeeze more value from a smaller pool of money will be paramount.

Novated leasing helps employees, and employers, do more with less.
It increases an employee’s after-tax benefit by increasing their tax savings.
It allows an employer to provide that increase without digging into their own pockets, and of course, it helps reduce your payroll tax at the same time...

Summary
While there is no direct effect on novated leasing (the increase in superannuation will not make it any more, or less, tax effective than before, and the rate of super contribution will be the same for an employee whether they package or not) the fact remains that there will be a decrease in take home pay for many employees.

Combine these new realities, with the recent FBT legislation changes, and vehicle salary packaging will become more attractive than ever before for employees. Employers too, will seek to maximise the opportunity to promote this benefit more aggressively than in previous years, especially now that FBT risk has significantly diminished.

Sign up to The Autopian for more on:
- FBT Risk is Dead
- Driver Savings
Continue to Increase
- Low KM Drivers Continue to Increase
- Medicare Levy Increase: Effect on Novated Leasing

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The Autopian | FBT Risk is Dead

Author: Barry Scott / Published Date: 26 June 2013

Categories: Novated Leasing, Consultancy, The Autopian

The Autopian

Leading edge commentary on the vehicle benefits industry l Winter 2013 
Sign up here

  • FBT Risk is Dead
    A landmark development that has the potential to benefit every employer, whether it’s currently offering novated leases or has resisted until now.
  • Low KM Drivers continue to increase
    Now that the incentive for higher kms (as well as penalties for not achieving them) have been largely eliminated, employees are happy to spend less discretionary time on the road and save on their running costs.
  • Tax savings continue to increase
    One might have predicted a reduction in savings this past year, as the tax rate for those driving >25,000kms pa moved from 14% to 17%. But that's not what happened...
  • Superannuation increases – effect on salary packaging cars
    Depending on your remuneration approach, the increase in the superannuation guarantee will affect your employees, and the relevance of novated leasing, in different ways…
  • Medicare Levy increase – effect on salary packaging cars
    As the Medicare Levy moves from 1.5% to 2%, how will this affect novated leasing?
  • Autopia appoint new CEO
    After 9 years in the driving seat, founder & Managing Director of Autopia, Jeffrey Morton, has appointed David Wakeley as Chief Executive Officer. [More here]
  •  Inside Autopia with: Geoff Payne
    Sales Manager Geoff Payne has been with Autopia for over five years, you could say he knows a thing or two about cars, and novated leasing…
  • Autopia driver survey results
    "The customer service was excellent. At all times George was clear and concise, explaining the technical aspects of the product I was purchasing. I also believe having the one point of contact throughout my lease period will be extremely beneficial." James Spurway, Challenger Financial Service Group

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Taxation made interesting?!

Author: Barry Scott / Published Date: 24 June 2013

Categories: Consultancy

Professor John Quiggin titled his presentation ‘Taxation Made Easy’. With all due respect to the Professor (one of the most prolific economists in Australia) that’s not what it was at all.

A good accountant makes taxation easy, Autopia make taxation easy - what the Professor presented at the CFO Summit in March was much better than that.

It was an overview of where the world sits right now from an economic perspective.
Followed up with a review of Australia’s position, and a prediction of what we might expect to see in the not too distant future – or maybe the distant future… depending on your perspective.

Nothing easy about that.

Here’s what he said about the global economic situation.
We’re only just beginning to come out the other side of the Global Financial Crisis.

- The US is showing a slow but steady recovery.
- UK and Europe are bumping along at the bottom.
- Asia is showing strong growth and China is being driven by the building boom.

Austerity measures haven’t really done the trick in Europe, and all Governments are struggling as a result of all the bailouts, benefits and stimulus packages they’ve had to fund.

They’re now in a position where they have to refill the coffers, and in general they’re looking to increase tax revenues wherever they can. Overall there will be less tolerance for tax evasion and avoidance.

The first port of call is the various tax havens that exist around the world in places like the Bahamas, Jersey and Liechtenstein etc.

This is likely to affect individuals more than corporations, and for those with means,
it looks like the party could be over as Governments begin to demand transparency inside those famed Swiss bank accounts.

For Governments looking to scrape a few hundred million dollars together this is an easy place to start, and there will soon be very few places left where you can hide a lazy couple of million.

In fact the recent G8 Summit at Loughe Erne in Northern Ireland confirmed this very move, with David Cameron persuading the G8 attendees to sign a commitment to clearing up tax havens, and ending corporate tax evasion. Which talks directly to the Professor's next point...

Next on the radar, will be big business he said. Not as easy to clamp down on, but a much greater payload at the end. More and more we’re hearing about large organisations being ‘named and shamed’ for paying very little tax. Hiding their profits ‘legally’ across national borders.

There will be more transparency, and many of the loopholes that allow this kind of activity will begin to close. In fact we’ve seen moves to this affect in the most recent Federal Budget.

Not only will this, if they manage it, allow Governments to reclaim lost tax revenue, but it will also help to prevent vast amounts of money being transferred around the world unchecked, which is partly how we got into this mess in the first place.

In general, ‘the people’ are not happy, having been sickened by the greed and mismanagement that has been revealed post GFC.

You don’t have to look too far to see the visible manifestations of this. The 99% movement for example, and in Switzerland recently there was a referendum where they voted to put a cap on banker’s salaries. People are standing up and saying “Enough!”

He went on to point out that complex financial structures are increasingly seen as illegitimate practices, and large accountancy and consultancy firms are more wary of entering into them, worried not only of financial risk – but of damage to their brand too.

The problem however, is that it’s a global game of cat and mouse - as soon as the Governments close a loophole, teams of highly paid professionals working for the global corporations look for other ways to work the system. The game goes on.

At least an agreement from the G8 leaders indicates a desire to resolve the issue, whether it eventuates or not, we'll have to wait and see.

And so to Australia
As we all know, Australia managed to weather the GFC storm better than most, and has experienced an unprecedented 20 years of growth. Whether it was down to good luck or good management, the good Professor refused to engage.

The mining boom is coming to an end he said, and the Government has missed a
once in a lifetime opportunity to capitalize on it. The mining tax failed to generate anywhere near the amounts of money it could have.



As with everywhere else Australia is facing the ageing demographic, and all the funding problems it will cause such as increased healthcare, dental, disability etc.

Although we missed the boat with the mining tax (which could have helped here) once again Australia is placed better than many countries – thanks to compulsory superannuation contributions.

So what’s next? The Henry Review
The Henry Review recommendations in general, match up with the global situation, echoing the trends of transparency and reduction in complexity. And so Professor Quiggin predicted that eventually, we’ll see many of the major recommendations implemented.

He advised having a good look at the Henry Review and preparing now for anything that might have an effect on your business, as opposed to waiting until the legislation is in place and then reacting when you don’t have a choice.

He finished by pointing out that the last time a tax review took place was in 1975 – The Asprey Review -  and five years on hardly any of the recommendations had been adopted, but 20 later - CGT, GST, FBT it’s all here.

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Autopia appoints new CEO

Author: Barry Scott / Published Date: 21 June 2013

Categories: Team Updates, Novated Leasing, Consultancy

After nine years in the driving seat, founder and Managing Director of Autopia, Jeffrey Morton, has appointed David Wakeley as Chief Executive Officer.

David brings a wealth of experience at senior executive levels in finance, sales and marketing, acquired across a wide array of industries including financial services, motoring, education and travel.

In David’s most recent role as Chief Executive Officer of the Australian Institute of Management NSW & ACT he helped to revitalised a 70 year old organisation, bringing the considerable strengths of the Institute to bear on the challenge of creating a better society. No small endeavour.

As Chief Executive Officer of Virgin Money his challenge was, having just entered into the Mortgage market, to lead the organisation through the Global Financial Crisis. No small feat yet again.

As General Manager of Sales and Marketing he kept the NRMA on track for four years, and we can’t wait to see what his fresh perspective and eye for a challenge brings to Autopia. More on David here...

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