Novated Leasing - Division of Human Resources

Introduction to Novated Leasing of Motor Vehicles

1. Introduction

As part of the University's salary packaging scheme, an employee may apply to enter into a novated leasing arrangement with Custom Fleet. The program provides employee's with a flexible approach to the acquisition of a motor vehicle (new or used, with various lease options).

Custom Fleet has been selected as the company to implement and manage the University's novated leasing program. Custom Fleet has extensive experience in fleet management with a broad range of public and private sector clients.

2. Conditions

Employees are able to apply for the following novated leases:

a Fully Maintained Operating lease,
a Fully Maintained Finance lease
a Non Maintained Finance lease

For more information regarding the above lease options please refer to the Custom Fleet web site at www.customfleet.com.au. All information is located under Our Services > Specialist Services > Vehicle Salary Packaging. The Custom Fleet Help Desk can also be contacted on 1800 811 922.�

3. Operating principles

Employees are encouraged to, and are responsible for, seeking independent financial advice on whether entering into a novated lease arrangement is beneficial in their individual circumstances.

As there are very specific conditions applying to the initiation, approval and cessation of the lease, it is the employee's responsibility to be aware of these conditions. Conditions are fully outlined in the Custom Fleet Lease documents.

General information and advice about the lease arrangements is available from the Salary Packaging Coordinator inHuman Resources on extension 47795 or (03) 83447795.

Custom Fleet will organise the Novated Lease process from start to finish. They will provide all required information, prepare lease quotations, source new motor vehicles where appropriate, prepare all required documentation, organise delivery of the vehicle and provide ongoing management services including expense payments and the provision of monthly reports tracking motor vehicle expenditure against your budget.

The University's Custom Fleet Account Manager is:

Nathan Osborne
ph: (02) 8899 5661

4. What is a "novated agreement"

A Novated Lease is a three-way agreement between the employee, the employer and Custom Fleet. The basic principles of a Custom Fleet Novated Lease are:

The employee leases the vehicle directly from Custom Fleet.
The employee, employer and Custom Fleet sign a Novation Agreement.
The employer undertakes to cover all agreed vehicle expenses during the employee's term of employment.

4.1 Establishing the lease

This arrangement is formalised by means of a novated agreement between three parties � the employee, employer and financier. Once approval has been received the following sequence of action occurs:

Custom Fleet and employee enter into a head-lease arranged by Custom Fleet.
The employee and employer enter into a Deed of Novation (Sub lease), arranged by Custom Fleet.
The employer gains possession of the vehicle by way of the Deed of Novation (Sub-lease). The vehicle is then returned to the employee as a fringe benefit for either private or business use.
The employer pays the employee's lease payments to Custom Fleet. This is the novation.
Payments, including the appropriate FBT and running cost charges, are debited pre-tax (where-ever legally permitted) to the employee's remuneration package in accordance with the agreed budget.

4.2 Lease Options

Custom Fleet offers a range of lease options:

Fully Maintained Operating Lease
Fully Maintained Finance Lease
Non Maintained Finance Lease.

There are different conditions and costs associated with each lease. Further details on these are available from the Custom Fleet web site or by contacting the Custom Fleet consultant

5. Procedures and conditions for establishing the lease

5.1 Approval to initiate a lease

Staff wishing to novate lease a vehicle will need to complete both a Custom Fleet and University application form.

Approval will be subject to Custom Fleet's normal terms and conditions and their assessment of the individuals financial position. The normal restriction of packaging up to 50% of salary applies.

5.2 Initiating a lease

The employee visits the Custom Fleet website to access more information and the available options in regards to novated leasing.
The employee can access the Custom Fleet private website to produce a variety of quotes for their analysis. The private Custom Fleet website is accessed through the public site www.customfleet.com.au and selecting Client Login > Salary Packaging Login and clicking onto the New User button if you do not have a Login ID already. Your University of Melbourne e-mail address should be used when completing the necessary details.� �
The employee can also contact the Custom Fleet Help Desk Help Desk on 1800 811 922� to discuss their motor vehicle and financing options and apply for a quote.
The Account Manager sends the employee a quote based on the various motor vehicles and leasing options discussed. The employee subsequently consults their accountant or financial advisor to make a decision on their best salary packaging option.
The employee completes the Custom Fleet application on-line for Custom Fleet approval.
Following approval Custom Fleet will prepare and send employee the standard head-lease and sub-lease (novated) documents for signature by the employee and the University. The University will not enter into an agreement where the conditions of the lease document and University application form are not in accordance with its requirements.
The employee signs the lease and brings the relevant documents (including lease form, novation agreement, Custom Fleet quote and HR32L) to the Salary Packaging Co-ordiantor for the University's approval. HR signs the lease.
The employee returns all lease forms to Custom Fleet who then order the vehicle.
The first salary deduction is made at this stage and normal deductions will commence on vehicle delivery.

5.3 Payment for the lease

The FRPS Manager will organise for the employee's remuneration package to be debited for the cost of the lease (including running costs) and the appropriate FBT.

6. Complaint resolutions

Any service concerns that employees may have with Custom Fleet should be directed to:

Joe Roda
ph: (03) 9474 1637
fax: (03) 9474 1501
email: jroda@customfleet.com.au.

7. General Conditions

7.1 Fines/Infringements

The employee is responsible for all traffic fines and infringements (cannot be packaged).

7.2 Arrangements for periods of leave without pay (LWOP)

Prior to any period of LWOP, the employee must make arrangements with the Salary Packaging Coordinator for payments to be made during the leave. If this is not arranged the University may terminate the novation agreement and all payments, including the running costs, will then be the responsibility of the employee (out of after-tax financial resources).

7.3 Registration

The lease costs include registration. Vehicles packaged under an operating lease are registered in the name of Custom Fleet.

Vehicles packaged under a Finance Lease are registered in the employee's name using Custom Fleet's address, enabling all administration and renewals to be handled by Custom Fleet.

7.4 Insurance

All vehicles will be covered by Custom Fleet's comprehensive insurance cover. For details about excess payments please refer to Custom Fleet's insurance details.

7.5 Administrative Fee

The University will charge a fee (currently $104 per annum) to cover the administrative cost associated with the establishment and maintenance of the lease and the FBT reconciliation. This fee will be deducted per fortnight (currently $4.00).

8. Fringe Benefits Tax

The FBT payments will be calculated based on your estimated kilometres and a provision toward FBT is deducted each fortnight as part of the lease payment. An annual FBT review (and end of lease reconciliation) will be undertaken and any liability will be deducted from the next available pay / any credit will be reimbursed to you.

9. Arrangements on cessation of employment

In the event of cessation of employment with the University, the University will notify Custom Fleet in writing, this will discontinue the sub-lease and novated agreement. All future payments and expenses will be your total responsibility.

Lump sum final payments will be held until Custom Fleet forward the final lease account (excluding FBT / fuel reconciliation).

The University will hold $200.00 from the employee's final salary until a reconciliation of outstanding lease and fuel payments is finalised.