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UWS EMPLOYEE STARTER PACK UWS and sgfleet strongly advise anyone who is considering entering into salary packaging arrangements to seek independent financial advice prior to entering into any such arrangement. All documentation should be read carefully. This document contains information that is confidential and which may be legally privileged. If you are not the intended recipient, you must not read, use, distribute or copy this document. sgfleet - employee starter pack Page 1 of 14 November 2008 TABLE OF CONTENTS Welcome to sgfleet Salary Packaging 3 Important Information for UWS Employees 3 What is a Novated Lease? 3 Suitability 4 Getting Started 5 Dedicated UWS Web Site Contact Numbers 5 5 UWS Dedicated Account Managers 5 Procedures for a Novated Lease Facility 6 How the sgfleet System Can Benefit You 7 Flexibility 7 Tax Advantages 7 GST 7 Choice of Vehicle 7 Supplier Choice 7 Pricing Advantage 7 Sale and Leaseback 8 Additional Vehicles 8 Discounts on Running Costs 8 Lease Options 8 Lease Terms 8 Lease Guard – Protection against Involuntary Retrenchment 8 Employee Reimbursements 8 Actual Cost Accounting 9 Lease End Benefits for Novated Finance Lease 9 Portable 9 Monthly Reporting 9 Frequently Asked Questions sgfleet - employee starter pack 10 Page 2 of 14 November 2008 WELCOME TO SGFLEET SALARY PACKAGING IMPORTANT INFORMATION FOR UWS EMPLOYEES – PLEASE READ UWS’s Salary Packaging Policy allows Employees to take advantage of the potential benefits of Flexible Salary Packaging, which means you are in a position to structure your gross salary to best suit your personal requirements and legitimately maximise the tax effectiveness of your salary package. UWS has retained the services of SGFLEET Salary Packaging (sgfleet) exclusively to manage the Salary Packaging program. sgfleet provide a one stop shop for your total Salary Packaging and Novated Leasing needs and have dedicated Account Managers to assist you throughout the entire process. This brochure has been developed to outline information of a general nature to assist you get started. In order to obtain detailed salary packaging information or pricing schedules on vehicles, you should refer to the attached sgfleet Telephone Directory for website and Account Manager details. Under the UWS Salary Packaging Policy you are able to salary package the following items through sgfleet. Salary Packaging Item Motor Vehicles – Novated Lease Applicable FBT Concessional WHAT IS A NOVATED LEASE? The sgfleet Novated Lease incorporates a standard Finance Lease Agreement held in the Employee’s name. The monthly payment obligation of this Lease is then transferred to the Employer/Agency via a Novation Agreement. The Employer/Agency then proceed to make the monthly lease payments on the Employee’s behalf. Under the sgfleet Novated Lease arrangement the entire annual vehicle costing are incorporated into the Employee’s salary package. The system provides a tax efficient and flexible car benefit system. Note: Should the Employee leave their employer for any reason, the Novation Agreement is severed and the finance obligation reverts to the Employee. The Employee retains possession of the vehicle, and has the choice to re-novate the vehicle to their next Employer, sell the vehicle to pay out the lease, or simply continue to pay the finance company directly. The Employers obligation to make the lease payment ceases upon termination of employment. The sgfleet Novated Lease has a fixed term which expires on the final lease installment, the Employee is then responsible for the payment or refinancing of the residual value. This allows the Employee to take advantage of any lease end benefits that may have accrued. The sgfleet Novated Lease System allows Employees flexibility in their choice of vehicle without additional cost to the Employer/Agency. With this arrangement Employees have the satisfaction of choosing a vehicle that best suits their requirements. Refer to ‘Employee Benefits’ section three of this brochure. The terms and conditions of the Lease contracts and ancillary documents will dictate your exact obligation and should be referred to carefully. sgfleet - employee starter pack Page 3 of 14 November 2008 SUITABILITY The level of benefit that any Salary Packaged item can provide will vary greatly depending on the Employee’s personal circumstances and the level of Fringe Benefits Tax applicable to each Salary Packaged item. The Calculator and Package BuilderTm located on the website are designed to allow you to assess your best options 24 hours a day 7 days a week. The benefits of an sgfleet Novated Lease are a lot easier to quantify and have been detailed in the back of this handout. sgfleet - employee starter pack Page 4 of 14 November 2008 GETTING STARTED 1. Visit the web site at www.sgfleet.com and log in to your dedicated area using the code UWS 2. View Salary Packaging Information • • • Information on Allowable Benefit Items An Interactive Package BuilderTM Relevant Forms & Processes for Non-Vehicle Related Salary Packaging 3. For all Novated Lease enquiries please contact a member of your dedicated team of Account Managers to assist you through the entire process. Your dedicated service team is the Green Team. Green Team Account Managers PH: 1800 818 487 Fax (02) 9391 5602 Account Manager Colin Markley Dirk Lievert Rodney Walsh Email Address cmarkley@sgfleet.com dlievert@sgfleet.com rwalsh@sgfleet.com One of the Green Team Account Managers will assist you from your initial enquiry and right throughout the entire process, along with a Settlements Co-ordinator to ensure your vehicle is delivered as required in good time with all paperwork in place. SGFLEET ALONG WITH UWS RECOMMEND EMPLOYEES SEEK INDEPENDENT FINANCIAL ADVICE BEFORE ENTERING INTO ANY NOVATED LEASE ARRANGEMENTS. sgfleet - employee starter pack Page 5 of 14 November 2008 PROCEDURE TO APPLY FOR A NOVATED LEASE FACILITY Prior to phoning sgfleet, we recommend Employees visit our informative website, www.sgfleet.com & login ID UWS to obtain preliminary Novated Leasing information The Employee phones their sgfleet Account Manager to discuss vehicle and leasing options and resolve any related queries. The Employee must also provide an estimate of their annual Kilometres to assist with the preparation of a Vehicle Salary Sacrifice Schedule (VSSS). The Account Manager will organise vehicle pricing tenders, then fax a VSSS to the Employee outlining the annual budgeted cost to package (usually within 24hrs), accompanied by a Novated Lease application form. The Employee completes the Application form and faxes it to their sgfleet Account Manager The Employee and ‘authorised’ company representative sign the VSSS then fax it to the Account Manager at sgfleet Within 24hrs of receiving the signed Novated Lease Application and signed VSSS, the lease documents are prepared and emailed or posted to the Employee's work or home address. The vehicle is ordered as soon as the leasing finance has been approved. Employee signs lease documentation then returns all documents to their sgfleet Settlement Co-ordinator. Yes Did we use an sgfleet Panel Motor Vehicle Dealer? The vehicle will be delivered within 1-2 days as sgfleet have credit arrangements with our dealer network No The vehicle will not be delivered until the lease settles and funds are deposited into their account usually within 7-14 days. The authorised deductions are subsequently matched to the payment advice form sgfleet - employee starter pack Page 6 of 14 November 2008 HOW AN SGFLEET NOVATED LEASE CAN BENEFIT YOU You have choice, flexibility and satisfaction in ownership! sgfleet gives you freedom of vehicle choice and the opportunity to be the registered owner, providing you with total satisfaction. Achieve real Tax $avings! With an sgfleet novated lease you are able to “Salary Sacrifice” a portion of your pre-tax income to accommodate a vehicle in your salary package providing you with potential tax savings. Pay no G$T! Acquiring a vehicle through an sgfleet Novated Lease means that you will pay no GST on the purchase price of the vehicle if purchased from a GST registered dealer. The Novation Agreement allows the financier to claim a 100% Input Tax credit on the GST payable. This represents a significant saving for you. Running costs associated with your sgfleet Novated Lease are also GST free. This represents a 10% saving on all motor vehicle expenditure deducted pre-tax via payroll. Your Employer will receive an Input Tax Credit for any GST that is applied to your vehicle running expenses. Compare running your vehicle without using the Salary Packaging mechanism to saving an ongoing 10% on most components of motor vehicle expenditure (i.e. leasing costs, fuel, maintenance, insurance etc) – the savings are very real. Choose a Vehicle to suit your lifestyle! You have a wide choice of vehicle make or model, including new and used vehicles up to 6 years old. Choose a supplier that suits your needs! sgfleet does not place any restrictions on where you buy your vehicle. Vehicles may be purchased from licensed motor vehicle traders, private sales (e.g. purchase from newspaper), sale and leaseback or any other legitimate means. Access superior discounts! As a private purchaser of a new vehicle you would receive only minimal discount. Acquiring a vehicle through an sgfleet Novated Lease allows you to take advantage of sgfleet’s volume purchasing power – this means greatly reduced prices for you! sgfleet - employee starter pack Page 7 of 14 November 2008 Instant Cash Injection – Sale & Leaseback! You can also choose to package the vehicle you currently own or have under finance. sgfleet assists in determining the market value of your vehicle, then the Finance Company pays the market value for the vehicle directly to you. You can then use these funds for any purpose (e.g. investment, lump sum payment on your mortgage, debt consolidation etc). The vehicle is then leased back to you under a Novated Lease arrangement allowing you to pay for the vehicle using pre-tax salary for all or most of your vehicle expenses. One Vehicle Policy! You are only able to Salary Package one vehicle at a time as per your employer’s packaging guidelines. Refer to your intranet website or Human Resources dept for further details. Access discounts on all running costs! Through sgfleet’s Australia wide Dealer Service Network (comprising of around 6,000 service outlets), you receive up to 30% on all service, parts and labour costs. This is over and above the existing pre-tax savings. sgfleet’s Pre- Authorisation program delivers; 9 Significant discounts on labour rates. 9 Trade price on parts 9 An expert opinion on the value of the work to be performed prior to the work being commenced. 9 A correct Tax Invoice to enable any GST credit claims. On your terms! The sgfleet Novated Lease is based on lease terms from 1 year to 5 years, depending on your individual circumstances. Protection against involuntary termination with – Lease Guard! Lease Guard has been designed specifically for needs of Employees with Novated Leases. In the event of involuntary termination or retrenchment, Lease Guard will cover your lease payments for a period of unemployment. Following termination, the first lease payment is paid by the policy holder, followed by up to 11 consecutive monthly lease payments then covered by your policy. Leaseguard is another value added benefit designed to give you peace of mind, and is recommended for all employees entering into a Novated Lease facility. No out of pocket expenses! You will never be left out of pocket for any vehicle related expenditure. Should you wish or need to pay for a vehicle cost personally (such as fuel or maintenance), sgfleet will reimburse you directly for any out of pocket expenses which you have incurred. sgfleet - employee starter pack Page 8 of 14 November 2008 Only pay for what you use! sgfleet uses an “Actual Cost Accounting” system which means that you only pay for what you use. A fixed monthly amount is allocated from your pre-tax salary to accommodate your total running expenses. This value is credited to your vehicle fund with sgfleet. All vehicle related expenditure is then deducted from this fund. In the event that you do not spend your entire allocation, the funds are passed back to you on an after tax basis through payroll at lease end. sgfleet provide you with a monthly driver’s report advising whether you are on target for both running costs and FBT. In the event you spent more than your budget, any shortfall is also adjusted after tax via payroll. If you are not on track at any point throughout your lease period, sgfleet can simply arrange to revise your annual budget accordingly. Access to lease end benefits! At the end of an sgfleet Novated Lease you will be in a position to offer to purchase the vehicle at the predetermined residual value (plus GST) and sell or trade their vehicle at market value. Under a Finance Lease you will directly benefit from any profit made on disposal. It’s portable! In the event that you leave your Employer, you can retain the vehicle and may re-novate to your new Employer. Easy to stay informed! sgfleet offer full online reporting and in addition will provide monthly reporting which will be emailed directly to you, providing a fully itemised reconciliation of your total vehicle expenditure, recording all debits/credits. This report also annualises kilometres so you can easily track your kilometres for FBT purposes. sgfleet - employee starter pack Page 9 of 14 November 2008 FREQUENTLY ASKED QUESTIONS When should I start the process? Depending on the make and model of the new vehicle, delivery times can be up to 3–4 mths. We recommend that you contact sgfleet as soon as possible to discuss your requirements with your dedicated Account Manager. What lease term & residual value can I choose? You can select lease terms of between 12 to 60 months. If you select a used vehicle the lease term will be determined by the age and kilometres travelled by the vehicle. Finance Lease Term 12 months 24 months 36 months 48 months 60 months Residual Value - 65% 55% 45% 35% 25% These are the minimum residual values allowable by the Australian Taxation Office. Higher residual values may be selected on consultation with your Account Manager. How do I request a VSSS (quote)? Quotes can be requested either directly by telephoning or emailing your dedicated Account Manager or on–line through the sgfleet web site www.sgfleet.com What information will my VSSS (quote) contain? Your VSSS will contain the following information: Section 1 – Employee details Section 2 – Vehicle details Section 3 – Finance details & FBT Method Section 4 – Salary Sacrifice Estimate - All running costs based on estimated Kilometres including, Statutory Fraction for FBT, Maintenance Budget, Tyres, Roadside Assistance (optional), Registration, Insurance, Leaseguard, FBT (if applicable), Fuel Budget and sgfleet management fee. These figures calculate the Total Estimated Pre-tax & Post-tax (if applicable) annual cost which is the amount that will be deducted from your annual salary. An estimated cost on your take-home pay in line with your pay cycle is also provided as a guide. Summary of Savings - Savings that can be achieved from GST on purchase price & GST on pre-tax running costs, volume savings on running costs & income tax savings Last Sections – Employee & Employer Authorisation sgfleet - employee starter pack Page 10 of 14 November 2008 How is FBT calculated? This method of calculating FBT is based only on the total number of kilometres travelled each FBT year, regardless as to the level of business use involved in this travel. Kilometre Band FBT Bracket Less than 15 000 15 000 to 24 999 25 000 to 40 000 Over 40 000 26% 20% 11% 7% The annual FBT payable on a vehicle under the Statutory Fraction Method is calculated by means of the following formula: FBT payable = (A x B x C) - E --------------D Where; A = the capital cost of the car B = the statutory fraction C = the number of days in the FBT year when the car was used or available for private use of Employee D = the number of days in the FBT year E = the Employee contribution (where applicable) There no requirement to identify business use therefore there is no need to run a log book. Remember that Employees are responsible for the actual FBT liability based on the annualised kilometers traveled – during the FBT year (1st April – 31st March). Employees not sacrificing at the highest Marginal Tax Rate are often best to package a vehicle via the Employee Contribution Method (ECM). This method allows you to pay for some of your vehicle costs from after-tax (nett) income via payroll. Every dollar you contribute after-tax towards running your vehicle offsets the same amount in FBT, eliminating FBT! (provided you meet your annual km bracket). Your sgfleet Account Manager will work out the best FBT method for you based on the gross income figure you have provided. Will sgfleet source my vehicle for me? For new vehicles, sgfleet utilise a nationwide panel of approved new motor vehicle dealers to service our national client base. The network covers remote locations as we have many drivers spread across all corners of the country. sgfleet’s panel of motor vehicle dealers delivers vehicles to the Employee. They also provide sgfleet with credit facilities of 7 days which has proven invaluable in speeding up the vehicle delivery process i.e. when using an sgfleet panel dealer the vehicle can be released once all paperwork is signed. Non-panel dealers usually will not release the vehicle until settlement is complete and the money is in their bank account. sgfleet - employee starter pack Page 11 of 14 November 2008 For used vehicles, you have the option of sourcing a used vehicle personally by the usual methods, or by utilising the many links available to various dealer portals via the The Red Book Guide on the sgfleet website. This can be found at the Vehicle Package Calculator on the fast find index on the sgfleet website - www.sgfleet.com sgfleet’s Used Vehicle Service can also assist you to source a quality used car and also help you at time of disposal. Refer to our website for further details on contact sgfleet on our toll-free number. Can I source my own vehicle? sgfleet offer the flexibility of allowing you to source and nominate your own dealer for new and used vehicles. You are not “locked in” to buying the vehicle through sgfleet panel dealers. You are also welcome to source your vehicle from a private sale or even leasing back your own vehicle. The process for applying for a Novated Lease is the same for new and used vehicles, except that dealers can occasionally request a deposit to hold a particular used vehicle, which is generally refunded upon delivery. Please note that a private sale used vehicle delivery can take a little longer to settle due to vehicle inspection requirements. Please contact your sgfleet Account Manager for further details. What do sgfleet do with my personal details for the Credit Application? Details provided to sgfleet on your credit application are used only for the purpose of obtaining credit approval. The Privacy Act ensures that this information is used only for the purpose for which it was intended & cannot be shared with any other party (including your employer). Can I claim car wash and running expenses? Car Washing, detailing and even minor paint repairs can be claimed against your sgfleet Fund as these are considered “maintenance and upkeep of your vehicle” Can I package Tolls and Infringement Notices? Tolls and road traffic infringements do not form part of your vehicles operating expenses and therefore cannot be salary packaged. You must pay for tolls and road traffic infringements out of your own pocket. Can I claim my motoring association membership? Auto Club membership expenses are associated with running your vehicle and therefore can be claimed against your sgfleet Fund. Can I have accessories/extra’s fitted to my car? Prior to ordering your vehicle you are free to add any option you choose. If during the term of your lease you wish to fit extra’s to your car you must pay for this out to your own pocket. You can not seek reimbursement for sgfleet for this type of expense. In order to gain the maximum tax benefit & avoid additional paperwork, it is best to opt for all required accessories at the time of enquiry with your sgfleet account manager. You must also immediately notify your insurer if your have any extra’s fitted. You must also immediately notify your insurer if your have any extra’s fitted. sgfleet - employee starter pack Page 12 of 14 November 2008 If my repairer/dealer isn’t in the Drivers Guide, how do I request that they join the Gold Club program? If the repairer you use is not part of the sgfleet preferred repairers listing, please provide the name of the repairer and their contact details to our Maintenance Department. They will contact the repairer and seek to arrange their addition to the sgfleet preferred listing. I’ve heard that Cash receipts must include the vehicle registration number and if not I have to pay GST. Is this correct? Receipts should have registration numbers on them to confirm the invoice relates to the vehicle novated. The only exception to this is fuel, as it is too difficult to expect the fuel attendant to write a receipt with the registration number etc on it. How often are odometer readings required? Odometer readings are updated on your vehicle report after the end of each month based on the odometer readings provided via fuel purchases and vehicle servicing carried out in the previous month. Once received, this information is then updated to your records and included in your next monthly Driver’s Report. An odometer declaration is required by you per vehicle for each year ending 31 March to reconcile your actual kms travelled to that budgeted for payment of your FBT liability. How do I know if my vehicle running fund expenses are running to budget? sgfleet will email you a monthly Cost Allocation report which provides you with actual expenditure vs. budgeted expenditure. sgfleet combine your entire vehicle running costs into one fund enabling costs to be distributed evenly e.g. your fuel budget won’t be in deficit while you have extra funds sitting in your maintenance account. sgfleet Revised Package Dept receive an exception report every month highlighting any driver who has a Fund balance of greater than $1,500 in debit. The Revision Officer reviews that Employee’s transaction history to determine whether they are really “off track”, or, whether it is a timing difference only. Where there is a genuine deviation from the budget, the dedicated Revision Officer will contact the Employee to discuss the situation. If necessary a new VSSS will be prepared with the required (increased) salary allocation to rectify the position and ensure adequate funds are being provided. How do I know if I am going to meet my FBT bracket? Your Monthly Cost Allocation report annualises the last provided odometer readings and compares the actual FBT liability (FBT Year to Date) to the FBT provision that has been deducted from your salary to date. It is therefore extremely important to provide an odometer reading at every fuel fill! Every month you can see how you are tracking with your kilometres for FBT purposes and whether you are on track with budgeted running costs. You may request a revised VSSS at any time, even if you are within the negative balance tolerable limit. sgfleet - employee starter pack Page 13 of 14 November 2008 What if I leave the company? If you leave the company the vehicle goes with you, and the novation agreement ceases. You can choose to either pay out the lease or continue making lease payments personally via a direct debit. You will have a direct relationship with the financier, just as if you had finance on a personal motor vehicle now. Your sgfleet maintenance fund (where all your deductions go) is reconciled and the funds returned to you via payroll. You may also have the opportunity to re-novate the lease to a new employer if they are happy to be the new novator, so you can once again enjoy the many benefits on the sgfleet Novated Lease Program. Continued management of your vehicle is dependant upon whether sgfleet has an arrangement with the new employer in managing their novated lease program. sgfleet - employee starter pack Page 14 of 14 November 2008