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Government CarPlan Leasing User Guide - University of South

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Government CarPlan Leasing User Guide - University of South ...

    Government CarPlan

    Leasing

    User Guide

    Customer Service Centre

    Tel: 1300 668 572

    Fax: 1800 331 041

    Email: cservice@leaseplan.com.au

    No person should rely on the taxation-related comments of this guide without first obtaining advice from a qualified taxation professional. LeasePlan expressly disclaims all and any liability and responsibility to any person in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this user’s guide.

    CONTENTS CONTENTS

     SECTION 1 ................................................................................................................................................................................................. 3SECTION 1 ................................................................................................................................................................................................. 3INTRODUCTION TO LEASEPLAN AND LEASING ........................................................................................................... 3 1.1 What is a Government CarPlan lease? .............................................................................................................................. 3 1.2 How does a Government CarPlan Lease work? ............................................................................................................. 3 1.3 Is a Government CarPlan your car or a company car? .................................................................................................. 3 1.4 What type of vehicle can be leased? .................................................................................................................................. 4 1.5 What are the benefits of using a Government CarPlan vehicle? .................................................................................. 4 1.6 What is the hand-back option/early return guarantee?.................................................................................................. 4 1.7 What happens if your employment terminates? .............................................................................................................. 4 1.8 Does the Privacy Act affect your arrangements with LeasePlan? ................................................................................ 5 1.9 The Employee Contribution Method (ECM) .................................................................................................................. 5 1.10 What are the possible risks of Government CarPlan leasing for employees? ...................................................... 5

     SECTION 2 ................................................................................................................................................................................................. 6SECTION 2 ................................................................................................................................................................................................. 6HOW TO PROCEED WITH GETTING YOUR GOVERNMENT CARPLAN ............................................................... 6 2.1 Deciding on your vehicle ..................................................................................................................................................... 6 2.2 Sourcing of new vehicles ..................................................................................................................................................... 6 2.3 Who to contact at LeasePlan .............................................................................................................................................. 7 2.4 To obtain a quotation on a vehicle .................................................................................................................................... 7 2.5 Information provided on the quotation ........................................................................................................................... 7 2.6 Order process ........................................................................................................................................................................ 7 2.7 Comprehensive insurance (mandatory) ............................................................................................................................ 8 2.8 Vehicle repair and maintenance (mandatory) .................................................................................................................. 8 2.9 Tyres, batteries and windscreen replacement (mandatory) ........................................................................................... 8 2.10 Other Provisions (mandatory) ...................................................................................................................................... 8 2.11 Fuel (mandatory) ............................................................................................................................................................. 9 2.12 Registrations and CTP (mandatory)............................................................................................................................. 9 2.13 Replacement vehicles (optional) ................................................................................................................................... 9 2.14 Regular reporting ............................................................................................................................................................. 9 2.15 FBT tracking services ..................................................................................................................................................... 9 2.16 Interest .............................................................................................................................................................................. 9 2.17 Depreciation ..................................................................................................................................................................... 9 2.18 Variations to operating costs ....................................................................................................................................... 10 2.19 Incorrect estimate of travel.......................................................................................................................................... 10 2.20 How FBT affects your package costs ........................................................................................................................ 10 2.21 Effects of distance travelled and FBT ....................................................................................................................... 11 2.25 Luxury taxation limit..................................................................................................................................................... 11 2.23 To claim „out of pocket expense‟ reimbursement ................................................................................................... 11 2.24 Expiry of the contracted lease term ........................................................................................................................... 12

     SECTION 3 ............................................................................................................................................................................................... 13SECTION 3 ............................................................................................................................................................................................... 13HOW TO IMPROVE YOUR PACKAGING BENEFIT WITH ECM ................................................................................ 13 3.1 The Employee Contribution Method ............................................................................................................................. 13 3.2 Will ECM be beneficial to me?......................................................................................................................................... 13 3.3 GST on ECM ...................................................................................................................................................................... 15 3.4 How do I nominate that I want to use ECM? ............................................................................................................... 15 3.5 Can I remove ECM from my lease once it has been set up? ................................................................................ 16 3.6 ECM - The impact of doing more or less kilometres per year. .................................................................................. 16

     DRIVERS SECTION 4 .......................................................................................................................................................................... 17DRIVERS SECTION 4 .......................................................................................................................................................................... 17DRIVERS ONLINE PACKAGE CALCULATOR INFORMATION ................................................................................. 17 a) Using Drivers Online ................................................................................................................................................................ 17 b) Affordability Calculator ........................................................................................................................................................... 17 c) Make/Model Selector ............................................................................................................................................................... 17 d) Package Calculator .................................................................................................................................................................... 18 e) Requesting a Formal Quotation.............................................................................................................................................. 18 f) Applying for your lease online ................................................................................................................................................. 19

     SECTION 5 ............................................................................................................................................................................................... 20SECTION 5 ............................................................................................................................................................................................... 20COMPREHENSIVE INSURANCE .............................................................................................................................................. 20 LeasePlan Total Cover product summary ................................................................................................................................. 20

    Government CarPlan, Updated 21/2/2008, Page 2

     SECTION 1 SECTION 1

    INTRODUCTION TO LEASEPLAN AND LEASING

LeasePlan founded global car leasing and fleet management and has a long history of innovation in the field.

    We are a market leader with an excess of 1.25 million vehicles in operation worldwide, with more than 82,000

    in Australia.

LeasePlan began operations locally in 1988 and is now the largest leasing and fleet management company in

    this country with offices in Melbourne, Sydney, Perth, Brisbane, Adelaide and Canberra.

1.1 What is a Government CarPlan lease?

    The Government CarPlan lease is an arrangement between your employer and LeasePlan, enabling you,

    the employee to use the vehicle for the term of the lease. All costs associated with financing and

    operating the vehicle, and applicable FBT liability are deducted from your pre-tax income.

1.2 How does a Government CarPlan Lease work?

    Under the arrangement, you select a vehicle from the list of most Australian manufactured vehicles and

    some imported vehicles which draw deep Government discounts. Your employer then leases the car

    from LeasePlan at purchase pricing that is applicable to your employer (i.e. Government Tender Board

    pricing) and enters into a standard Operating Lease Agreement. You are then assigned the right to use

    your vehicle for the term of the lease in return for your commitment to reimburse your employer for

    the incurred costs of providing you with the vehicle. Your employer pays the lease rentals and

    operating costs directly to LeasePlan while these costs together with FBT liability are recovered from

    your pre-tax income.

     Pre-tax payroll deduction

     Employee Employer

     Provision of car and Long Term Hire operating costs Agreement

     LeasePlan

1.3 Is a Government CarPlan your car or a company car?

    A Government CarPlan vehicle is a still your employer‟s car which receives the benefits of

    Government pricing. To be eligible for a Government CarPlan vehicle you must qualify for the use and

    allocation of a Government vehicle and the vehicle must be available for business usage. In order for

    you to achieve the maximum benefit under this arrangement you should treat the car as your own

    because you have the potential to receive the benefit of lower running costs by looking after the vehicle.

     If you fail to look after the vehicle the additional costs will directly impact you.

    Government CarPlan, Updated 21/2/2008, Page 3

    1.4 What type of vehicle can be leased?

    LeasePlan is happy to provide you with Government CarPlan leasing on most Australian manufactured

    vehicles and some imported vehicles, which draw deep Government discount. The vehicle must be a

    passenger vehicle (excluding motor bikes and commercial vehicles greater than 1 tonne carrying

    capacity) and be acquired new. The list of eligible vehicles is contained in LeasePlan‟s online quote

    simulation tool „Driver‟s Online‟ (see section 4 below).

    1.5 What are the benefits of using a Government CarPlan vehicle?

    ? You obtain a vehicle at reduced pricing (Government Tender Board Pricing and GST Input Tax

    Credits).

    ? Your vehicle costs are deducted from your salary before tax.

    ? You may achieve a benefit at lease expiry via a refund of unused operating costs.

    ? Significant benefits can be obtained via pre-tax savings on lease and operating costs.

    ? Increase disposable income and lower or eliminate the FBT liability with post-tax contributions via

    the Employee Contribution Method (ECM).

    ? You save on operating costs through full fleet management controls. Savings can be up to 30%

    less than retail. ? Vehicles that have been carefully taken care of will normally have higher resale values as well as

    lower running costs. These savings are passed on to you.

    ? LeasePlan can claim a GST Input Tax Credit on the vehicle purchase and on all operating costs.

    You will enjoy GST free motoring. You only pay GST on the residual value at lease expiry if you

    purchase the vehicle. Please note the limitation on luxury vehicles, on which the maximum input

    tax credit is currently $5,193.

    ? Your vehicle can be returned at no cost if employment is terminated.

    ? The vehicle can also be purchased outright if your employment is terminated.

    1.6 What is the hand-back option/early return guarantee?

    LeasePlan‟s Government CarPlan lease allows you the option to terminate your lease in the event that

    you resign, retire, die are dismissed, retrenched, or on maternity/paternity leave or extended leave

    without pay. You simply return the vehicle to a LeasePlan nominated site and walk away.

Early return of the vehicle may incur cost of damage, any pro-rata kilometres travelled in excess of

    budget or any deficit that may occur in the Other Provisions expenditure account, which will be billed

    to you. These costs will be collected from you upon the return of the vehicle.

    1.7 What happens if your employment terminates?

    If your employment is terminated, you can then choose one of these 3 options:

    Option 1 - Early terminate the lease by purchasing the vehicle at the lease payout value on your day of departure, including GST charges.

    Option 2 - The vehicle may be assigned to another employee subject to agreement between the new employee and your employer.

    Option 3 - Return the vehicle to LeasePlan. Please note if there is damage to the vehicle, excess kilometres or a deficit balance in other provisions‟ expenses, these amounts will have to be settled by

    you upon the return of the vehicle.

Under Option 1 a reconciliation of operating costs is undertaken within seven days of the lease

    termination. Any surplus/deficit in actual operating costs compared to budgeted costs will be

    refunded/invoiced to your employer. Amounts refunded will be added to your payroll and will be

    subject to income tax. Where an amount has been invoiced, this amount will be deducted from your

    payroll pre-tax. To achieve this reconciliation within seven days LeasePlan undertakes some estimation

    of operating costs incurred but not recorded or paid at the time of the reconciliation. In addition

    LeasePlan includes a nominal estimation shortfall amount of $95.00 to cover unknown costs incurred

    but not paid.

    Government CarPlan, Updated 21/2/2008, Page 4

Under Options 2 and 3 no operating cost reconciliation is undertaken.

    1.8 Does the Privacy Act affect your arrangements with LeasePlan?

    Some of the information you provide to us may be personal or sensitive as defined under the Privacy Act 1988 (Cth). In providing LeasePlan Australia with this information you have consented to

    LeasePlan using and disclosing such information for the purpose of providing you/your employer with its services.

    If you do not supply us with this personal information, we may be unable to supply you/your employer with such services. Please refer to our Privacy Policy on our website www.leaseplan.com.au for more

    information.

    1.9 The Employee Contribution Method (ECM)

    Changes to tax thresholds as of the 1 July 2006 and again on the 1 July 2007 impacted packaging of motor vehicles for certain employees and could reduce your salary packaging benefit. By utilising the Employee Contribution Method (ECM) the impact may be neutralised and in some cases your benefit actually increases. ECM is the recognised method that provides the greatest benefit for employees earning less than $150,000 pa.

    When using ECM you make a post-tax contribution towards the cost of operating your lease vehicle. For every post-tax dollar you contribute, your FBT taxable value is lowered by the same amount, thus reducing your FBT liability. If you elect to use ECM LeasePlan will calculate the post-tax contribution amount required to completely eliminate your estimated FBT liability.

    Detailed information on the benefits and the considerations you need to make prior to using the ECM are contained in Section 3 of this User Guide.

    1.10 What are the possible risks of Government CarPlan leasing for employees?

    ? If your vehicle is returned to LeasePlan at either the completion of the lease or under early

    termination conditions, any damage, excess distance travelled (where kilometres are in excess of

    budgets) or deficit in “Other Provisions” expenditure will be directly payable by you.

    ? Benefits, which exist under current tax laws, could change under the policy of the Government of

    the day or via future tax rulings.

    ? The vehicle may be more expensive to run than was originally estimated. ? The budget allocation for Car FBT and ECM calculations may be inaccurate if the kilometres

    travelled have not been correctly estimated.

    Government CarPlan, Updated 21/2/2008, Page 5

    SECTION 2 SECTION 2

    HOW TO PROCEED WITH GETTING YOUR GOVERNMENT CARPLAN

    2.1 Deciding on your vehicle

    To help you assess whether a lease is right for you and which vehicle meets your needs, LeasePlan

    suggest you utilise Drivers Online (refer to Section 4) to assist you in your decision on selecting the

    vehicles you would like LeasePlan to quote on.

Drivers Online will provide easy online access to:

    ? An affordability calculator to help you determine the likely cost of a lease vehicle

    ? A manufacturer/model selector that will help you to select a car

    ? A package calculator to compare cars, lease variations and impact on salary

By using these online tools you will be able to:

    ? Register online

    ? Request lease quotations online

    ? Apply for your lease on line

If you prefer to speak to a LeasePlan representative directly please call 1300 668 572. LeasePlan will

    need the following information to assist quoting for your vehicle:

    ? Vehicle make and model

    ? Options and accessories

    ? Estimated total kilometres you will travel each year

    ? Number of years for which you would like the lease

    2.2 Sourcing of new vehicles

    LeasePlan will obtain pricing from its preferred dealer network. If you wish to obtain your own pricing

    from a dealer you should do this before contacting LeasePlan. You should obtain details of availability

    and pricing in writing, and provide LeasePlan with written dealer quotations so a detailed lease quote

    can be prepared for you. Your vehicle will be sourced from LeasePlan‟s suppliers, or your dealer if

    price and availability is better.

The quotation you obtain from the dealer must include the following information to enable an

    evaluation of price and availability by LeasePlan.

? Description of vehicle (including all options and accessories)

    ? Dealer on road costs (including stamp duty, registration and CTP)

    ? Availability (expected delivery date)

LeasePlan will be happy to provide the names of our preferred vehicle supplier network to you.

    Additionally, you may visit the LeasePlan web site at www.leaseplan.com.au where you can find the

    New Vehicle Supplier Finder underneath the „Find a Supplier‟ button.

Should you request sourcing from a supplier at a higher cost than that obtainable by LeasePlan, then

    LeasePlan may require the order to be placed via its preferred dealer or may decline the lease.

Remember, if talking to a dealer do not sign or commit to the purchase of a vehicle.

    Government CarPlan, Updated 21/2/2008, Page 6

    2.3 Who to contact at LeasePlan

    For initial inquiries phone 1300 668 572. If you prefer, please email our Customer Service Centre at cservice@leaseplan.com.au.

    2.4 To obtain a quotation on a vehicle

    LeasePlan has developed an online quotation simulator (refer to Section 4. Drivers Online) which allows you to conduct your Government CarPlan leasing over the internet, either in its entirety or whatever parts you prefer. Drivers Online includes an online affordability and lease package calculator to assist you with deciding what vehicle to lease as well as the required application forms to complete your lease arrangement (Refer to Section 4. Drivers Online Package Calculator Information). Drivers Online allows you to undertake modelling for a range of new vehicles using all different variables of vehicle model, lease term, residual value and annual distance travelled.

    Once you have decided which vehicle you want to lease you can obtain an accurate quotation from LeasePlan. Submit your preferred package estimate via the Drivers Online system or complete a Lease Quote/Order Form and fax it to LeasePlan on 1300 794 572.

    Options may be added to the vehicle to a maximum value of 10% of the total purchase price. If you decide to add options after your credit has been approved you will need to notify LeasePlan so that your credit approval can be reviewed and a new quote issued.

    Once your vehicle has been delivered you cannot add options into your lease - you will be required to pay for these from post- tax income.

    2.5 Information provided on the quotation

    The quotation will list the price of the vehicle and a full budget for the running of your vehicle for the term and kilometres indicated. It includes monthly and annual figures for:

? Lease rental

    ? Maintenance and repairs

    ? Tyres

    ? Registration

    ? Auto club membership

    ? Fuel

    ? Other Provisions

    ? Comprehensive insurance

    ? Management fees

    ? Budgeted FBT liability

    ? FBT ECM off-set (if ECM is used)

    ? GST on ECM post-tax contributions (if ECM is used) ? Total package allocation for salary deduction ? Pre-tax and post-tax lease payment split (if ECM is used)

    2.6 Order process

    LeasePlan will email your lease quote to you. After receiving a lease quotation you will need to print and sign it off, and also obtain the signature of your employer‟s authorised manager.

Once you and your employer‟s authorised manager have signed your lease quote, you can either:

    ? Enter the Drivers Online system and complete your online Lease Application. ? Return the signed form to our Customer Service Centre by fax on 1300 763 572. LeasePlan

    suggests using the Drivers Online system, as it will result in a shorter turn-around time for you.

    Government CarPlan, Updated 21/2/2008, Page 7

Please be aware this is a formal process and can take up to 8 days from quote to order. Omissions or

    providing insufficient information on your application could cause further delays. The Privacy Act

    prevents any information supplied by you to LeasePlan to be shared with any third party.

New vehicle delivery lead times vary greatly with each manufacturer. LeasePlan generally recommends

    that you allow up to three months ensuring that special build and specific colour requirements can be

    met. LeasePlan will advise you of the expected delivery date. The delivery date is subject to change and

    can be influenced by unforeseen manufacturer or shipping delays. You will be advised of any changes.

    2.7 Comprehensive insurance (mandatory)

    LeasePlan offers low premiums for comprehensive insurance. The premium is budgeted for in the

    lease payment and is paid from your salary before tax. These premiums are subject to annual review

    and an individual‟s claims experience.

    Please refer to Section 5 for details on our comprehensive insurance and the benefits of electing to have LeasePlan Total Cover Insurance included in your vehicle lease.

    2.8 Vehicle repair and maintenance (mandatory)

    To realise the true benefit of fleet management, all servicing and repair work to your vehicle must be

    pre-authorised by LeasePlan prior to the service or repair. When booking your vehicle in for work you

    will advise the service supplier that LeasePlan manages the vehicle. The service supplier then calls

    LeasePlan for pre-work authorisation. All invoices for work are billed to and paid by LeasePlan.

You may determine which manufacturer-approved dealership you wish to use for servicing or

    repairing your vehicle. The service supplier must be an approved repairer of LeasePlan and we will be

    happy to provide those names to you, or refer to the “Find a Supplier” section at

    www.leaseplan.com.au. We recommend that a franchised dealer specific to your vehicle should complete all mechanical servicing and repairs. This assists in controlling both costs and quality of work.

    Additionally it saves the necessity of a vehicle being transferred to an authorised dealer to affect any

    warranty claims that may be applicable as well as avoiding out-of-warranty issues.

    Vehicle maintenance and repair budgets are based upon manufacturers‟ specified servicing schedules, as well as any repairs that are the result of normal driving and fair wear and tear (brakes, exhaust, etc).

    To minimise your maintenance expense our team of maintenance controllers will pre-authorise all

    work on your vehicle. LeasePlan‟s vehicle maintenance controllers are all qualified mechanics and are

    committed to ensuring that all work carried out on your vehicle is necessary to ensure your safety and

    to ensure the vehicle is maintained in sound condition.

    2.9 Tyres, batteries and windscreen replacement (mandatory)

    For the location of preferred suppliers of tyres, batteries and windscreen replacement, you should refer

    to the LeasePlan Driver‟s Guide, provided with each vehicle at delivery. Additionally, you may visit

    the LeasePlan web site at www.leaseplan.com.au and utilise the online “Find a Supplier”. Click on the

    supplier finder icon to give you a search drop down box. You then simply type in your location and

    service requirement and the Supplier Finder will provide you with names and contact numbers for

    your nearest relevant suppliers and also provide a map reference for your convenience. In accordance

    with our maintenance procedure, the service provider will need to contact our maintenance controllers

    for pre-approval before proceeding.

    2.10 Other Provisions (mandatory)

    There are several items that are excluded from standard maintenance programs. These items include

    broken glass, non-standard maintenance items, minor impact damage and vandalism. A budget called

    “Other Provisions” has been built to accommodate these items. Insurance excesses can also be paid

    through Other Provisions with the benefit of becoming pre-tax costs for you.

    Government CarPlan, Updated 21/2/2008, Page 8

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    Monthly reports show the actual interest based on the depreciating value of the vehicle. You will notice that in the first half of the lease that actual interest exceeds the “straight-line” budgeted amount,

    because the value of the vehicle is higher. As the months progress the variance between the monthly budgeted vs. actual cost reduces until half-way through the lease, when the monthly budget and actual cost are identical. You will notice that in the second half of the lease the variance between the actual vs. monthly budget is reversed.

    If you have difficulty understanding your vehicle report please access LeasePlan‟s Web Site www.leaseplan.com.au for detailed instruction on how to read and understand your vehicle reports.

    The final report will show that the cumulative actual and budgeted interest costs will balance.

    2.18 Variations to operating costs

    Each quotation for a Government CarPlan vehicle will be provided with a cost budget for all operating costs mentioned in point 2.5.

    Often there will be unused budget at the end of the first year as operating costs are generally lower in the initial stages of a lease. Most vehicles have lower servicing costs during this period. As you continue into the lease, these unused budgets will diminish as tyre replacement and major service intervals occur. A final reconciliation will be performed at the completion of your lease.

    If your vehicle costs less to operate than the budgets nominated then any surplus will be returned to you via your payroll. Conversely if final costs are greater than the budget these costs will be billed to you via payroll.

    If during the lease a major cost deficit or surplus looks likely to occur, LeasePlan will liaise with you and your employer to increase or decrease further budgets to absorb these discrepancies. Any adjustments to budget and salary deduction will be undertaken once a year and only when necessary.

    2.19 Incorrect estimate of travel

    LeasePlan regularly reviews your vehicle report to track budgeted versus actual costs and kilometres travelled. If abnormal (> 10%) debits or credits are being generated or significant kilometre variations arise, we will contact you to agree on a new budget and therefore a new package allocation.

    2.20 How FBT affects your package costs

    When you obtain a vehicle under a Government CarPlan lease arrangement your employer becomes liable for Car Fringe Benefit Tax. The FBT liability, which your employer incurs, is charged back to you as part of your salary deduction. Car FBT is usually calculated using a statutory formula as follows:

Car FBT Liability =FBT Base Value X Statutory Factor X 2.0647 X Days Available X 0.465

     Days in FBT year

The Statutory Factor varies according to the annual distance travelled:

    Kilometres travelled per annum Rate

    0 - 14,999 26%

    15,000 - 24,999 20%

    25,000 - 40,000 11%

    40,001 + 7%

    If your vehicle lease commenced during an FBT year (1 April to 31 March), it is necessary to gauge the kilometres that would have been travelled if the car had been operated for the entire year. This is done by averaging the kilometres travelled per day from the initial delivery date and multiplying it by 365. For instance, where a lease commenced halfway through the FBT year and travelled 12,000 km, the annual distance would be 24,000 km and the 20% statutory rate (see table above) would apply to the Car FBT liability calculation.

    Government CarPlan, Updated 21/2/2008, Page 10

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