How Much Work Is It for My Payroll Staff?
A common concern for employers considering novated leasing is whether it creates additional work for payroll teams. The good news? As with any service, novated lease management is very straightforward and requires minimal effort with the right support in place.
What’s Involved for Payroll?
Your payroll staff will typically handle:
- Salary Deductions: Processing pre- and post-tax deductions from employee salaries.
- Record-Keeping: Maintaining basic records for compliance purposes.
- Liaising with the Provider: Communicating with the novated lease provider if adjustments are needed.
Streamlined Processes with Clear Lease
Modern novated leasing providers like Clear Lease simplify the process by:
- Automating Deductions: Clear instructions and integration with payroll systems reduce manual work.
- Providing Reports: Regular, easy-to-read summaries ensure accurate and timely deductions. They will also provide your FBT reporting to make tax time much easier.
- Handling Administration: We manage the complex parts, so your team only handles the essentials.
How Much Time Does It Take?
Most payroll teams spend just a few minutes per pay cycle processing novated leases, making it a low-impact task for your business.
A Payrolls Dream Team
At Clear Lease, we prioritise simplicity for employers. From setup to ongoing management, we ensure your payroll staff can handle novated leasing with ease.
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Related Questions:
Employers need to manage salary deductions, report fringe benefits accurately, and partner with a leasing provider to ensure compliance. The service focus of your leasing provider will determine how much of the administrative tasks are handled by you, vs them.
The main consideration is the time required for payroll adjustments, but with modern systems and provider support, this is usually minimal. The benefits—like happier employees and potential payroll tax savings—often outweigh any minor drawbacks.
FBT is a tax (with a rate at 47%) applied to fringe benefits (incentives beyond salary/wages received from an employer). A non-electric car under a novated lease is a fringe benefit (electric cars are completely FBT exempt in Australia).
The employer is responsible for paying the FBT, but at Clear Lease - we use the employee contribution method (contributing post-tax funds) to offset any FBT to zero.
This works because we can tax deduct any expenses incurred in the arrangement and maintenance of a vehicle as a fringe benefit. We work out the right mix of pre-tax and post-tax payments the employee needs to make to make sure the FBT liability is negligible for the employer.