For members of the Australian Defence Force (ADF), defence salary sacrifice provides a smart way to reduce the cost of vehicle ownership by using pre-tax income. This arrangement makes it easier to drive a high-performance car, such as the Tesla Model Y Performance, while enjoying tax savings and bundled expenses. Pairing this with a self-managed novated lease gives you even more flexibility, control, and savings. This article explores how these two options work together to maximise your benefits.
What is Defence Salary Sacrifice?
Defence salary sacrifice allows ADF members to use pre-tax income to cover vehicle lease payments and related running costs. This arrangement lowers taxable income, meaning less income tax paid each year. It also bundles vehicle expenses—such as registration, insurance, and maintenance—into one monthly payment, making budgeting easier.
With salary sacrifice, ADF personnel can:
- Reduce taxable income, resulting in substantial tax savings.
- Enjoy all-in-one payments that cover the car lease and running expenses.
- Use government tax incentives, especially for electric vehicles (EVs) or energy-efficient cars.
What is a Self-Managed Novated Lease?
A self-managed novated lease gives ADF members more freedom by allowing them to control various aspects of the lease process, such as selecting the vehicle, managing expenses, and negotiating terms directly with the dealer. This option is ideal for individuals who want greater control over costs and the flexibility to customise their lease.
Benefits of a Self-Managed Lease
- More Flexibility: Choose any vehicle that suits your lifestyle or budget.
- Customised Expense Management: Shop around for the best deals on insurance, registration, and servicing.
- Reduced Fees: Save on third-party management costs that come with traditional novated leases.
How Defence Salary Sacrifice Enhances a Self-Managed Novated Lease
Using defence salary sacrifice alongside a self-managed novated lease offers a range of benefits for ADF personnel:
1. Lower Taxable Income
By salary packaging the vehicle lease payments, you reduce the amount of income subject to tax. This results in significant annual tax savings.
2. Bundled Vehicle Expenses
Defence salary sacrifice allows you to include all related expenses—fuel, insurance, and maintenance—within the lease package, helping you manage costs more efficiently.
3. Greater Flexibility and Control
With a self-managed novated lease, you can select any vehicle you prefer, including fuel-efficient cars or electric vehicles that may qualify for additional government incentives and tax exemptions.
4. Simplified Budgeting
Bundling all vehicle-related expenses into pre-tax payments creates predictable monthly costs, making it easier to manage your finances.
Tips for Maximising Your Leasing Benefits
Choose a Fuel-Efficient or Electric Vehicle
By selecting an energy-efficient vehicle or EV, you can access government rebates, exemptions from Fringe Benefits Tax (FBT), and other financial incentives.
Monitor and Adjust Lease Terms
With a self-managed lease, you can modify the lease duration or kilometre allowance to suit your needs, ensuring you optimise your savings.
Bundle All Running Costs into Your Lease
Include insurance, registration, and servicing in the lease to benefit from pre-tax savings on all vehicle-related expenses.
Explore EV Incentives for Defence Personnel
ADF members can take advantage of FBT exemptions and other incentives available for EVs, making electric vehicles more affordable through a novated lease.
Why a Self-Managed Novated Lease Works Well for ADF Personnel
The demanding nature of military life means flexibility and control are essential. A self-managed novated lease aligns with the lifestyle of ADF members by:
- Allowing quick adjustments to lease terms when life circumstances change.
- Offering control over vehicle choices, including upgrades or downsizing when needed.
- Reducing stress by consolidating expenses into predictable, pre-tax payments.
Conclusion: Maximise Your Savings with Defence Salary Sacrifice
Combining defence salary sacrifice with a self-managed novated lease offers ADF personnel an efficient way to access the vehicle of their choice while enjoying significant tax savings. This flexible arrangement simplifies budgeting by bundling all running costs into one payment, reducing financial stress.
Whether you are planning to upgrade your vehicle or transition to an electric car, this arrangement allows you to take full advantage of tax benefits and government incentives. With the right planning, ADF members can drive smarter, reduce their tax burden, and enjoy a seamless vehicle ownership experience.
