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Australian car subscription company Carbar has launched a subscription service pitched as a more tax-effective alternative to traditional novated leases.
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Carbar launches tax alternative to novated car leases
07 March 2022
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A novated lease allows an employee to finance a car while reducing their taxable income via a salary sacrifice scheme with their employer.
Carbar said its novated subscription provides the same benefits as a novated lease in terms of salary packaging and tax deductions, but also covers costs such as vehicle depreciation, interest, registration, insurance and routine maintenance, as well as offering the flexibility of ending the subscription with two weeks’ notice.
The service launched on the back of a private ATO ruling attained by Carbar, which found that novated subscriptions are considered the same as a novated lease in the eyes of the Tax Office. It builds on the company’s Carbar for business strategy launched in 2020, which aims to give companies an alternative way of providing a company car.
“We’ve created a product here that we believe will strongly compete with existing novated lease offerings,” Carbar chief executive and co-founder Des Hang said.
“It provides the same benefits as a novated lease, but with more advantages and flexibility. Our carbarConnect application can also help log vehicle usage for tax purposes and further use-related deductions.
“We also expect to see many companies use this product to encourage the adoption of EVs among their employees.”
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Recent research from Carbar and YouGov finds that three-quarters of Australian workers aged over 21 regarded car-related employee benefits as appealing.
In addition, more than half (57 per cent) of them said car-related discounts are attractive if offered as an employee benefit, including discounts at car dealerships (44 per cent) and discounts at car manufacturers (40 per cent).
Carbar’s novated lease subscription is available for companies with over 10 employees.
The news follows Carbar’s latest $28.9 million funding round, which was led by IAG and Seven West Media.
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