After the excitement of getting a new car, it’s good to remember that the purpose of a novated lease is to save you money through salary packaging. This is done by reducing the amount of tax you pay for car expenses that you otherwise would need to pay direct from your wallet.
When agreeing to proceed with Smart Drive, our team estimate running cost budgets for your vehicle, based on information such as; finance costs, the vehicle itself, and the expected annual travel. These are our best estimates of your spend, and your payroll deductions are based on these. It is important to note that as your personal circumstances change, or even external factors such as the current fuel price increases, these budgets need to be reviewed from time to time.
Your budgets are set to pay for your regular expenses, such as; finance payments, roadside assistance, and fuel costs. They are also designed to accumulate funds to reimburse those expenses that occur annually or less frequently, such as; registration and insurance, services, and new tyres. Your accumulated balance works as a pool, that pays for or reimburses all of your vehicle running costs. So it is important to recognise that if you start spending more in one area than is budgeted for, although you may still have a balance, there may not be funds to reimburse those longer term expenses when they arise.
We recommend tracking your balances, and submitting your claims, through the Prosperity Salary Packaging App. We also recommend that if you have a larger than planned running expense that might eat into the budgets you are accumulating for future expenses, reach out to our team and arrange for additional payroll deductions to reimburse the claim. Your tax savings increase, while maintaining your balance for future planned expenses, and best of all your reimbursement is typically processed next business day.
A final key point to remember is to make sure you submit reimbursement claims for all running costs that you pay for, whether it be insurance renewals, registration costs, and even car washes, after all this is what your accumulated salary packaging balance is for!
If you have any questions about your Smart Drive vehicle budgets, balance, or unexpected running costs, please touch base with our team via phone on 1300 761 388, email smartdrive@prosperity.com.au, or through the Prosperity Salary Packaging App.
