Login
Speak to a Broker
1300 362 627

Author: rdelavictoria

Is a novated lease worth it for my business?

Posted on by rdelavictoria

The importance of optimising resources and enhancing employee satisfaction have never been more pronounced for businesses. Against this backdrop, novated leases have emerged as a unique and versatile vehicle financing arrangement that not only aligns with the fiscal wellbeing of businesses but also addresses the diverse needs of employees. But as all businesses are different, there still lies a critical question for employers to consider: is a novated lease worth it for my business?

In this article, we’ll explore the business novated lease benefits and considerations, so you can decide whether implementing a novated lease program is right for your business.

What is a novated lease?

A novated lease is a unique vehicle financing arrangement where an employee leases a vehicle and the associated operating costs are deducted from their pre-tax salary. This agreement involves three parties: the employer, the employee, and a finance company. The employee assumes the responsibility for the lease, including maintenance and running costs, while the employer facilitates the deductions.

How does a novated lease work?

Under a novated lease, the employer deducts lease payments and associated costs from the employee’s pre-tax salary. This reduces the employee’s taxable income, resulting in potential tax savings. The employee retains the flexibility to choose the vehicle and is responsible for its day-to-day expenses.

Benefits of novated leases for businesses

Novated lease employer benefits are extremely diverse, but obvious advantages include:

Tax savings

One of the most significant novated lease employer benefits is the potential for tax savings. By allowing employees to pay for their vehicle and associated expenses from their pre-tax income, both the employer and the employee can experience reduced taxable income. This not only results in potential tax benefits for individuals but can also contribute to the overall financial health of the business.

The tax savings extend beyond the individual employee to the employer, as the company may benefit from reduced payroll taxes.

Improved employee morale

Introducing novated leases as an employee benefit can have a positive impact on overall job satisfaction and morale. Employees value perks that enhance their work-life balance and well-being. The opportunity to lease a vehicle with associated tax benefits demonstrates a commitment from the employer to the holistic welfare of their workforce. By enhancing the employer’s reputation as a forward-thinking and employee-friendly organisation, novated leases can have a significant impact on improving talent attraction and retention.

Reduced administrative costs

Novated leases can streamline administrative processes for employers, particularly in the realm of fleet management. As employees take on the responsibility of managing their own vehicle-related expenses, businesses can experience a reduction in administrative overhead. This includes tasks related to tracking and managing company vehicles, processing reimbursement claims, and handling maintenance issues.

By offloading these responsibilities to employees, businesses can allocate resources more efficiently and focus on core operational activities. The reduction in administrative burden can be particularly beneficial for smaller businesses with limited administrative capacity.

Give employees access to a wider range of vehicles

Novated leases empower employees to choose vehicles that align with their preferences and lifestyle. Greater flexibility in vehicle selection can contribute significantly to employee satisfaction and retention. Employees will appreciate the ability to drive a car that suits their personal and professional needs, leading to a higher level of contentment in the workplace.

The access to a broader range of vehicles also allows employees to stay current with the latest advancements in automotive technology, eco-friendly technology and safety features. This can have indirect benefits for the employer, as employees driving modern and well-maintained vehicles may contribute to the overall image and professionalism of the business.

Is a novated lease right for my business?

Determining whether the business novated lease benefits are worth it for your business requires careful consideration of various factors.

Size and type of business

The size and nature of your business play a crucial role in determining the feasibility of implementing a novated lease program. Larger organisations with a diverse employee base may find it more manageable to administer and oversee such programs, as they often have more extensive resources and infrastructure in place.

Smaller businesses, on the other hand, may need to evaluate whether the potential benefits outweigh the administrative complexities involved. It’s also important to note that the type of business and its industry can influence the suitability of novated leases. For businesses that involve extensive travel or require a mobile workforce, the appeal of novated leases may be much more pronounced.

Employee needs

Understanding the preferences and needs of your employees is essential when considering novated leases. If your workforce values vehicle-related benefits, and if your business operations involve significant travel or transportation requirements, a novated lease may align well with the needs and expectations of your employees.

Conducting surveys or holding discussions with employees can provide valuable insights into their preferences regarding vehicle options, commuting preferences, and overall interest in participating in a novated lease program. By aligning the program with employee needs, businesses can maximise the positive impact of novated leases on employee satisfaction and retention.

Your budget

While novated leases definitely offer a wide range of benefits, it’s crucial to evaluate whether the associated costs align with your business’s overall budget and financial strategy. Consider the financial implications of offering novated leases, including the potential impact on cash flow and the ability to allocate resources to other critical areas of the business.

Businesses should conduct a thorough cost-benefit analysis to determine whether the tax savings, administrative efficiencies, and employee satisfaction outweigh the financial investment required to implement and maintain a novated lease program.

Navigating the road to business excellence with novated leases

When weighing novated lease pros and cons for businesses, it’s clear that they can be a valuable tool for enhancing employee benefits, streamlining operations, and potentially reducing costs. However, the decision to implement such a program should be tailored to the specific needs and circumstances of your business. This is where the importance of a tailored novated lease solution comes into play.If you’re ready to embark on implementing a novated lease program, contact your broker or get in touch with Metro, who can provide you with further information about our range of competitive novated leasing solutions.

What is a Finance Lease? A Complete Overview

Posted on by rdelavictoria

Finance leases are a popular product option that can provide significant advantages to businesses. Whether you’re looking to acquire new equipment, vehicles, or other assets, finance leases offer a practical and accessible way to achieve your goals. But how does a finance lease work? And how do you know whether it’s the right commercial financing solution for your business?

In this complete guide to finance leases, we’ll walk you through the definition of finance leases, benefits, drawbacks, and the different types of finance leases available.

How do finance leases work?

At its core, a finance lease is an agreement that allows a business to use an asset for an extended period, typically the asset’s economic life, without bearing the full cost of ownership.

When a business decides to pursue a finance lease, they choose an asset they wish to acquire, which can include anything from machinery to vehicles. In this finance lease example, the business identifies a lessor, such as Metro, to provide the financing. The lessor purchases the asset and leases it to the business for an agreed-upon term.

During the lease term, the business makes regular payments, covering both the asset’s depreciation and the financing cost. At the end of the lease term, the business often has the option to purchase the asset at its residual value or continue leasing a new asset.

Benefits of finance leases

Finance leases offer a range of advantages for businesses, making them an attractive option for acquiring assets. Here are some key finance lease benefits:

  • Improve Cash Flow: Finance leases require a lower initial cash outlay compared to an outright purchase, which frees up capital for other business needs.
  • Access Latest Equipment: Businesses can more easily acquire the latest and most advanced equipment in their industry without large upfront investments.
  • Tax Benefits: In many cases, finance lease payments are tax-deductible, which can provide potential tax advantages for businesses.

Flexible Terms: Finance lease terms can be tailored to match the asset’s expected economic life, ensuring flexibility and suitability for the business.

Finance lease process

Understanding the process of obtaining a finance lease is the first step for businesses considering this financing option. Here’s a step-by-step guide to how finance leases work:

Step 1: Choose an asset

Select the asset you need for your business operations. Assets can be anything from tertiary assets to more substantial investments such as light commercial vehicles, agricultural equipment or yellow goods. It’s crucial to evaluate your business requirements carefully and choose an asset that will enhance your operations and productivity.

Consider the following when selecting your asset:

  • Relevance: Ensure that the chosen asset aligns with your business’s goals and needs. It should contribute to improved efficiency and profitability.

Lifecycle: Assess the expected economic life of the asset to determine the most suitable lease term.

Step 2: Find a lessor

Choosing the right lessor is a critical decision in the finance lease process. Look for a lessor with a proven track record in finance leasing and a reputation for reliability and transparency. Metro, for example, is a trusted name in the industry, offering tailored solutions to meet your unique business needs.

When researching and selecting a lessor, consider:

  • Reputation: Investigate the lessor’s history, reviews, and customer testimonials to gauge their credibility and trustworthiness.
  • Experience: Ensure that the lessor has experience in financing assets similar to the one you’re seeking.

Flexibility: Opt for a lessor who can tailor lease agreements to accommodate your specific business requirements.

Step 3: Negotiate a lease agreement

Once you’ve chosen your asset and selected a reputable lessor, it’s time to negotiate the lease agreement. This is a crucial step where you determine the terms and conditions that will govern your finance lease. Key points to address during negotiations include:

  • Lease Period: Agree on the lease’s duration, considering the asset’s expected economic life, your business needs, and budget.
  • Payment Schedule: Define the payment structure, including frequency (e.g., monthly or quarterly) and the amount of each instalment. Ensure it aligns with your cash flow.
  • Additional Conditions: Discuss any specific conditions or requirements, such as maintenance responsibilities, insurance, or options for asset upgrades.
  • Residual Value: Clarify the asset’s residual value at the end of the lease term, which is the amount you may need to pay to acquire the asset if you choose to do so.

Documentation: Review and finalise all necessary documentation, including the lease agreement and any associated paperwork.

Step 4: Make lease payments

Once the lease agreement is in place and all details are settled, it’s time to begin making regular lease payments. These payments typically cover both the depreciation of the asset and the financing cost. Making consistent and on-time payments is essential to ensure the smooth operation of your business.

Step 5: What happens at the end of the lease?

At the end of the lease term, you will have several options to consider:

  • Purchase the Asset: You may choose to buy the asset at its residual value, taking full ownership of it.

Continue Leasing: Alternatively, you can opt to continue leasing the same asset if it still suits your business needs, or negotiate a new lease agreement for a different asset.

Accounting and tax implications of finance leases in Australia

Understanding the accounting and tax treatment of finance leases is essential as it can impact your business’s financial statements and tax deductions.

  • On-Balance Sheet: Finance leases often require the asset to be recognized on the lessee’s balance sheet. This can affect financial ratios and financial statement presentation.
  • Tax Deductions: Lease payments are typically tax-deductible expenses, reducing the lessee’s taxable income and potentially lowering their tax liability.

Is a finance lease not right for you?

While the various types of finance leases offer many advantages, they may not be the best fit for every business, so it’s important to consider any potential finance lease drawbacks. If finance leasing doesn’t align with your needs or circumstances, there are alternative financial products to consider, such as Commercial Loan or Chattel Mortgage (CM), which Metro also offers. 

Unlike a Finance Lease, a Commercial Loan gives you ownership right away and you then pay off the loan from the income the asset generates in your business. A Chattel Mortgage, meanwhile, is a financing option that allows you to take ownership of the asset immediately while financing the purchase through a mortgage arrangement.

Where do I start?

If you’re interested in exploring finance leases or other financing options, Metro is here to guide you. Our team of experts can help you assess your business’s specific needs and find the financing solution that best suits your requirements. Contact us today to get started.

Businesses realise the benefits of novated leases for employee retention, as growth surges at Metro

Posted on by rdelavictoria

About the study

Australia’s competitive labour market is motivating employers to actively seek out new ways to retain current employees while attracting new candidates. Novated leases are an employee perk that has seen significant growth in 2023.

A novated lease is a three-way agreement whereby an employer, employee and novated lease provider agree to a novated lease, a form of car finance. It enables employees to salary package a vehicle, with the lease payments and running costs (including fuel, servicing and insurance) paid from their pre-tax pay. When the lease ends, the employee can pay the balance to own the car or switch to a new car and only pay the difference.

Metro commissioned a survey of an independent panel of 204 Australian business directors and decision-makers to explore business attitudes about novated leases as an employee attraction and retention tool. Metro also aimed to find out the businesses’ understanding of novated leases by asking them to select a statement they believe best describes a novated lease.

The survey spanned the full spectrum of SME owners. They included micro (1-15 employees), small (16-50 employees), medium (15-200), and large-sized businesses (more than 200 employees).

The survey respondents matched the geographical and population spread of the Australian population.

Metro also analysed its own novated lease settlement data between October 2022 and December 2023 to gauge the growth in this type of car financing at the company in the last year. Metro settles approximately 2000 vehicle loans each month, including novated leases, which it has grown substantially over the course of this year.

Added to the analysis was Metro’s ranking, with percentage growth figures, of the vehicle brands that are most popular among businesses in novated lease arrangements.

Growth in novated leases in 2023

Metro’s own data reveals that novated leases are growing in popularity among their customers despite being a recent addition to its service offerings. In 2023, there was a 212 per cent rise in Metro’s novated lease settlements.

Analysing the growth of its novated lease originations, Metro found that novated leases made up 14 per cent of all Metro loan settlements in October 2022, growing to 39 per cent in November 2023 – the largest proportion of novated leases in a single month in 2023. September also saw large volumes, at 36 per cent.

In the December 2023 quarter, the proportion of customer financing under novated leases at Metro was 36 per cent, up from 17 per cent in the 2022 December quarter – almost double the rate.

In 2023, novated leases averaged more than a quarter (27%) of all Metro loan volumes.

Novated leases for electric vehicles see the biggest growth

Metro also analysed the brands that are most popular for novated lease arrangements in 2022 and 2023 (up to November), comparing active loans across the two years. Thanks to Federal and State Government incentives for electric vehicle purchases, Tesla is leading the charge, with Metro reporting a 22 per cent increase in Teslas financed under novated leases in 2023.

BYD and MG, also well-known for electric cars, experienced a 4 per cent and 3 per cent growth this year for novated leases, respectively.

The growing interest in greener vehicles has led to a decline in active novated leases on traditionally favoured car brands, with Metro seeing the most significant decrease (5%) in Toyota vehicles.

Novated leases under Kia, Mitsubishi and Subaru also declined by 2 per cent, while novated leases for Hyundai vehicles remained the same, at 6 per cent.

Ford and Mazda experienced a 1 per cent decrease in active novated leases from 2022.

Business sentiment on novated leases helping them retain and attract employees

The increase of novated leases over the past year is only projected to rise with more companies predicted to acquire employee perks and take advantage of government incentives into creating an economy and environment that fosters the growth of  electric vehicles.

In its survey of 204 Australian business directors and decision-makers, Metro sought to discover how many businesses believe that offering employees or new candidates novated leases through a salary sacrifice arrangement would help attract new talent and retain existing employees.

Respondents could select from one of the answers below:

  1. Yes, I think a novated lease would help to retain some existing employees
  2. Yes, I think a novated lease would help to attract new employees
  3. No

The data revealed 70 per cent of businesses believe a novated lease would help staff retention alongside attracting new candidates, while only 30 per cent stated otherwise.

More specifically, 44 per cent of businesses believe that a novated lease would help to retain some existing employees, while a quarter (26%) believe that a novated lease would help attract new candidates.

By State.

Metro found West Australian businesses have the greatest confidence in novated leases to help with staff retention and attract new employees, with 81 per cent stating so. This is followed by:

  • 74% of NSW businesses
  • 74% of South Australian businesses
  • 70% of Queensland businesses
  • 56% of Victorian businesses

More specifically, 56 per cent of WA businesses believe that a novated lease would help retain employees and a quarter (25%) believe it would help attract new candidates.

The data also revealed that businesses in SA are more likely to believe a novated lease would entice new employees (chosen by 47%).

By business size.

The data reveals that small (11-50 employees) and large enterprises (more than 200 employees) are equally likely to believe that a novated lease would either assist in attracting new staff or retain current employees, with 87 per cent of small businesses admitting so. This is followed by 82 per cent of medium-sized businesses and only 51 per cent of micro businesses.

Specifically, medium-sized businesses are most likely to believe that novated leasing would help with staff retention (chosen by 61%), followed by 57 per cent of large businesses and 56 per cent of small businesses.

However, despite the increasing popularity of novated leases and the benefits businesses believe it has on staff retention and recruitment, the survey also found that businesses still need more education around novated lease arrangements.

More than half of businesses don’t understand novated leases

Metro sought to find out how many Australian businesses understand what a novated lease is. Metro asked respondents to choose the answer they believe best describes a novated lease, from the options below. The last option is the only true answer:

  1. A novated lease is simply a long-term business car rental, with the driver responsible for making the rental payments. There is no end to the lease term, and the payments cannot be used as ‘down payments’ on the car.
  2. A novated lease is a car lease by a company. A company is responsible for making payments, but it assigns the car to an employee. At the end of the lease term, the company can choose to pay the balance and own the car outright, or switch to a new car.
  3. A novated lease is where an individual leases a vehicle through a ‘salary sacrifice’ arrangement with their employer. The lease payments and vehicle running costs are made with an employee’s pre-tax pay. At the end of the lease term, the employee can choose to pay the balance and own the car outright, or switch to a new car.

Only 40 per cent of respondents chose the correct (c) answer, leaving 60 per cent of businesses with a false or inaccurate understanding of the increasingly popular employee perk.

By State.

Across the states, Metro found that businesses in South Australia are most likely to have an accurate understanding of novated leasing, with 47 per cent selecting the correct answer. This was followed closely by businesses in Queensland (46%), Western Australia (44%) and NSW (43%). Victorian businesses are least likely to know what a novated lease is, with only 31 per cent selecting the right answer.

The data further reveals that over half (51%) of businesses in Queensland and 48 per cent of Victorian businesses believe that a novated lease is a car lease by a company whereby the company is responsible for making payments whilst assigning the car to an employee (answer B).

By business size.

Metro found that medium-sized businesses are least likely to have a correct understanding of novated leasing, with 76 per cent selecting incorrect answers (A & B).

Micro businesses are most likely to select the correct answer, with nearly half (49%) selecting answer C. This was followed by 48 per cent of large businesses, 32 per cent of small businesses, and less than a quarter (24%) of medium-sized businesses.

More than half (55%) of medium-sized businesses and half (50%) of small businesses are under the misconception that novated leases involve the company making payments towards the lease after assigning it to an employee (answer B).

Lower levels of understanding around novated leases may also lead to a small proportion of businesses being aware that they can benefit from government-backed electric vehicle subsidies, which offers thousands of dollars in rebates, fringe benefits tax, and stamp duty exemptions.

For example, zero-emission vehicles owned by Victorian residents don’t attract luxury vehicle stamp duty rates, rather they pay a flat rate of $8.40 of market value, regardless of the purchase price of the vehicle[1]. Residents in Western Australia can also score a $3500 rebate on new zero-emission vehicles with a dutiable worth of $70,000[2].

On the road: Around the country for incentives for buying electric vehicles[3]

Federally:

  • Battery electric vehicles, plug-in electric vehicles don’t pay customs duties as long as they’re below the luxury car tax threshold.
  • Zero or low tailpipe emission vehicles below the luxury car tax threshold are exempt from Fringe Benefits Tax when financed under a novated lease. This places EVs more in reach of employees who wish to take out a novated lease[4].

 

NSW:

  • New and used EVs cheaper than $78,000 do not attract stamp duty.
  • The government’s $3,000 rebate for EVs ends on 31 December, 2023, from when it will invest more in EV charging infrastructure.

Victoria:

  • Zero-emission vehicles don’t attract luxury vehicle stamp duty rates, rather they pay a flat rate of $8.40 of market value, but that is regardless of the purchase price paid.
  • As well, zero and low-emission vehicles can get a $100 discount on annual vehicle registration, but this isn’t available for electric heavy vehicles nor electric motorcycles.

Queensland:

  • There is a $6,000 rebate for individual buyers of new electric vehicles, and up to a $3,000 rebate for businesses. The purchase price threshold is $68,000.
  • Sales of electric and hybrid vehicles save 33% on stamp duty. Find out more here.

South Australia:

  • A limited number of $3,000 rebates and three years’ free registration are available for battery electric vehicles worth less than $68,750. Learn more about the program here.

Western Australia:

  • This state is offering a $3,500 rebate for the first 10,000 buyers of new zero-emission vehicles with a dutiable worth of $70,000. Read the fine detail here.

Tasmania:

  • Tasmania is in between offering incentives for electric vehicle buyers.

Northern Territory:

  • Up until 30 June 2027, a $1,500 stamp duty discount is on offer to those buying new or used electric vehicles, fuel-cell and plug-in hybrids. It’s limited to vehicles having a dutiable worth no more than $50,000.
  • Over that time frame, new and existing battery-electric and plug-in hybrid electric vehicles will enjoy concessions on registration and stamp duty. This applies to cars imported from interstate or overseas, previously registered or modified electric vehicles.
  • Businesses and homeowners are eligible for a $2,500 and $1,000 rebate respectively to purchase and install an electric vehicle charger.

Australian Capital Territory:

  • New and used zero-emission vehicles have two years’ free registration until June 30, 2024.
  • New cars, motorcycles, utility and light commercial vehicles that are zero-emission are stamp duty exempt.

 

[1] https://www.sro.vic.gov.au/motor-vehicle-duty-current-rates

[2] https://www.transport.wa.gov.au/projects/zero-emission-vehicle-zev-rebate.asp

[3] Some states and territories have introduced road-user taxes for electric and low-emission vehicles, whereas others may do so in future.

[4] https://www.mynrma.com.au/electric-vehicles/buying/ev-incentives

Behind the scenes with Metro: Brokers reflect on their path to success

Posted on by rdelavictoria

Meet some of our amazing brokers who help shape the financial success at Metro: Anthony, Jason, Lewis, Treyena and Sam. As valued finance brokers, they are part of the driving force behind countless client success stories, united by a genuine desire to support others on their financial journey. From the motivations fueling their interest in finance to the challenges they have overcome, they provide invaluable guidance.

Being a finance broker is an adventurous journey filled with versatility. While a solid foundation in finance is essential, this field requires a diverse skill set and the ability to juggle multiple responsibilities.

What does a typical day or week look like in the role of a finance broker?

Jason Hjorring, broker at Adaptalift, structures his days with daily meetings, industry updates, and travel, while prioritising building long-lasting customer relationships. “I call at least five active customers per day to check in on their lives and business.”

Meanwhile, Lewis Higgins, partner at QPF Finance and Insurance divides his time between client interactions and application processing. “I break up the day, spending mornings and afternoons contacting clients and the middle of the day is usually spent putting applications together and gathering information for financiers.”

And for Treyena Prasad, broker at Loan Options.ai, every day is unique. “No one of my days or weeks look the same, which is sometimes my favourite part about being a broker. I speak with my clients daily, whether for a quick progress update or a short text indicating when they can expect news.”

What were their key motivations for pursuing a career as a finance broker?

In an environment where ‘money makes the world go round’, a career in finance is enticing and ideal for a professional with the right skills and the right attitude.

Jason found his motivation in driving positive outcomes for customers and a passion for continuous learning. “Starting a finance brokerage from scratch involved building relationships, creating business processes, hiring staff, and developing plans. It has been challenging yet rewarding.”

At times, a career path is not always easily defined. For Anthony Fiorenza, General Manager at finance brokerage Natembo, a career in finance was not initially planned. Instead, it evolved a fulfilling pursuit of transforming dreams into reality. Treyena’s journey, too, came about both by chance and intent. She got into finance during the COVID years, transitioning from the automotive industry. This change allowed her to rediscover her passion for asset finance, fuelling a renewed enthusiasm for her career.

Creating successes, adapting to change, and overcoming challenges 

With the financial sector worth $360.6 billion, embarking on a finance career offers plenty of opportunities for growth and development, providing a stable and reliable career choice.

Anthony finds joy in helping clients achieve their goals, while Jason and Sam recount success in orchestrating complex deals. For Lewis, it is about helping clients overcome financial challenges. While Treyena is motivated by personal success stories, from settling on a sleek Ferrari for a client to orchestrating a last-minute wedding fund!

Sam Roby, broker at Pure Capital in Sydney, adds another layer to this dynamic profession with a memorable success story. A long-term client faced rejection from two banks for financing a concrete pump needed to fulfill a critical contract. Despite challenges as a new business without financials, Sam negotiated on his behalf, leveraging the strength of the new contract to secure the deal. Over four years, Sam has financed eight more pumps, along with cars and a boat.

Each success story adds a unique perspective, but all brokers acknowledge the challenges posed by industry shifts, including rate rises, policy changes, personal data, and technological advancements.

Finally, what are the valuable lessons and insights gained from being a finance broker?

A common theme emerges: Love what you do, both professionally and personally.

Treyena says a passion for learning is crucial: “Always be open to learning – finance is everchanging. Do certificates, attend workshops, and network. Hone in on your soft skills, effective communication and active listening are some of the best qualities you can have before beginning your journey in the industry. If you are a woman looking to join the industry, build strong relationships with other women in the industry and create a supportive network around you.”

Lewis emphasises opportunities everywhere. “For every transaction, there are usually two or three other opportunities within that deal.”  He also beams as a proud family-man who values balancing professional pursuits with precious moments in his personal life. Sam adds, “When you love what you do, the boundaries between work and life naturally blend.”

 

Elevating workplace value and what really matters: employee insights from Metro

Posted on by rdelavictoria

In today’s competitive job market and challenging economic climate, job seekers often place salary and work-life balance at the top of their list when evaluating prospective employers. However, it has become increasingly clear that individuals seek more. They desire opportunities for growth, a sense of connection and community, and the chance to find genuine meaning and purpose in their work.

To gain a better understanding around this, at Metro, we initiated a research report in November 2022 by conducting internal employee focus groups, made up of demographic cross-sections as well as exit interviews from the past 12 months. The resulting insights revealed our company’s pioneering approach, our fostering of trust, open communication, collaboration and cross-training opportunities. Our commitment helped create a work environment where, considering the overall employee experience, Metro would be a great place to work. An overwhelming 98% of responses were favourable, 4% above the average when compared with other medium-sized businesses.

Reflecting our own results, an Employer Brand Research 2022 survey by recruitment company Randstad found that the top five most important criteria in Australia are work-life balance (chosen by 62% of respondents), attractive salary and benefits (58%), job security (56%), good training (53%), and a pleasant work atmosphere (51%). Additionally, Metro employees place emphasis on justice (97% of employees)—the extent to which management promotes inclusive behavior, avoids discrimination, and is fair—and leadership behavior (94% of employees) aligning with our company’s strategy and values.

At Metro, we have consciously prioritised meaningful work and career development, providing a unique approach when it comes to attracting and retaining top talent while enhancing employee satisfaction and retention. After all, the employer brand is Metro’s reputation and image as an employer and the value we offer employees.

While flexible work arrangements have taken centre stage to enhance the employee experience across industries due to COVID-19, at Metro, we go beyond embracing flexibility. Our culture encourages purchasing leave, greater career mobility, and facilitating lateral transfers without obstacles. Strong management support and regular meetings connect employees to our company’s broader mission, fostering a profound sense of purpose. And, of course, who can resist a well-stocked snack cupboard!

‘Meaningful work’ is not just a buzzword. Our employees experience empowerment without encountering roadblocks to their career ambitions. The ‘no politics and no hidden agenda’ philosophy creates an agile environment where employees say they receive genuine support from both our management and colleagues. This creates an environment in which taking ownership, making valuable contributions, and exercising autonomy are the norm. In turn, a culture of recognition is evident across our brand’s social media platforms, where internal promotions are celebrated regularly.

In Metro, employees are not just contributors; they are the driving force. This approach is echoed widely in a recent Quarterly Employment Market Update from recruiters MillerLeith:“While other technical skills are necessary, soft skills help employees collaborate effectively, communicate clearly, and adapt to changing situations. Soft skills such as problem-solving, empathy, emotional intelligence, leadership, and teamwork are valuable assets for any organisation. They promote a positive work environment and help create strong relationships with colleagues, customers, and stakeholders. Hiring for soft skills helps organisations build a more engaged and productive workforce, enhances the company’s reputation, and creates a culture of excellence”.

Employee feedback plays a pivotal role in shaping our unique employer brand. Employees feel “everyone’s voice is valued and heard,” they take charge of their careers, explore different paths, and align with their professional aspirations and desire to make a difference. This sets Metro apart as an employer of choice. Our company actively supports employee growth through engagement via onboarding and recognition programs, mentoring initiatives, wellbeing support, and training opportunities.

At Metro, our emphasis on career development is not solely about enhancing employee satisfaction; it is a strategic move that significantly contributes to the company’s overall growth. This alignment creates a dynamic and engaged workforce, enabling the company’s continued success in the ever-evolving financial services industry.

Our organisation is undeniably walking the talk, leading a cultural shift through our intentional actions and decisions. This holistic approach is at the core of our company’s strategic vision and unwavering commitment to our people. It is this shared journey towards success that Metro and we, the employees, are embarking on together.

Metro is an independent Australian non-bank lender specialising in auto and equipment finance for businesses, car finance for consumers, and novated leasing. Excelling in customer service and offering highly competitive rates, Metro (metrofin.com.au) is one of Australia’s most popular non-bank commercial asset finance lenders. Speak with a Metro broker today to explore the available options for your business.

 

[1] The Employer Brand Data and Analysis survey was conducted by Metro Finance in November 2022. The survey utilised the following data sources: 1) Internal focus groups comprised of current staff, featuring a diverse cross-section of demographics including age, role, tenure, level, and gender; 2) Exit interview reports from the past 12 months.

[2] From the independent survey with ‘Great Place To Work’ undertaken in February 2023.

[3] https://www.randstad.co.uk/s3fs-media/uk/public/2022-05/Randstad_REBR_UK_2022.pdf

[4] From the independent survey with ‘Great Place To Work’ undertaken in February 2023, based on focus areas with benchmark.

[5] https://www.millerleith.com.au/quarterly-employment-market-update-q1-2023/

[6] https://www.millerleith.com.au/quarterly-employment-market-update-q1-2023/

Businesses realise the benefits of novated leases, as growth surges in 2023

Posted on by rdelavictoria

About the study

Australia’s competitive labour market is motivating employers to actively seek out new ways to retain current employees while attracting new candidates. Novated leases are an employee perk that has seen significant growth in 2023.

A novated lease is a three-way agreement whereby an employer, employee and novated lease provider agree to a novated lease, a form of car finance. It enables employees to salary package a vehicle, with the lease payments and running costs (including fuel, servicing and insurance) paid from their pre-tax pay. When the lease ends, the employee can pay the balance to own the car or switch to a new car and only pay the difference.,

Metro commissioned a survey of an independent panel of 204 Australian business directors and decision-makers to explore business attitudes about novated leases as an employee attraction and retention tool. Metro also aimed to find out the businesses’ understanding of novated leases by asking them to select a statement they believe best describes a novated lease.

The survey spanned the full spectrum of SME owners. They included micro (1-15 employees), small (16-50 employees, medium (15-200), and large-sized businesses (more than 200 employees).

The survey respondents matched the geographical and population spread of the Australian population.

Metro also analysed its own novated lease settlement data between October 2022 and November 2023 to gauge the growth in this type of car financing in the last year.

Added to the analysis was Metro’s ranking, with percentage growth figures, of the vehicle brands that are most popular among businesses in novated lease arrangements.

Growth in novated leases in 2023

Metro’s own data reveals that novated leases are growing  in popularity despite being a recent addition to its service offerings. From October 2022 to November 2023, Metro reported a , with novated leases making up more than a quarter (26%) of all Metro car loan settlements.

Novated lease settlements as a percentage of all car loan/lease settlements grew from 16 per cent in October 2022 to 31 per cent in October 2023 (15% YOY increase). The proportion of novated leases reached a peak of 31 per cent in the 2023 September quarter – a 14.4 per cent increase from the 2022 December quarter.

September 2023 saw the highest proportion of novated lease settlements, peaking at 35 per cent, followed by 31 per cent in October and August 2023.

The proportion of novated leases by lease volumes (amount financed) peaked in the September 2023 quarter, hitting 32 per cent – up from 16 per cent in the December 2022 quarter. September 2023 saw the biggest novated lease volumes at Metro, at 36 per cent.

Novated leases for electric vehicles see the biggest growth

Metro also analysed the brands that are most popular for novated lease arrangements in 2022 and 2023, comparing active loans across the two years. Thanks to Federal and State Government incentives for electric vehicle purchases, Tesla is leading the charge, with Metro reporting a 22 per cent increase in Teslas financed under novated leases in 2023.

BYD and MG, also well-known for electric cars, experienced a 4 per cent and 3 per cent growth this year for novated leases, respectively.

Novated leases under Kia, Mitsubishi and Subaru also declined by 2 per cent, while novated leases for Hyundai vehicles remained the same, at 6 per cent.

Ford and Mazda experienced a 1 per cent decrease in active novated leases from 2022.

Business sentiment on novated leases helping them retain and attract employees

The increase of novated leases over the past year is only projected to rise with more companies predicted to acquire employee perks and take advantage of government incentives into creating an economy and environment that fosters the growth of electric vehicles.

In its survey of 204 Australian business directors and decision-makers, Metro sought to discover how many businesses believe that offering employees or new candidates novated leases through a salary sacrifice arrangement would help attract new talent and retain existing employees.

Respondents could select from one of the answers below:

  1. Yes, I think a novated lease would help to retain some existing employees
  2. Yes, I think a novated lease would help to attract new employees
  3. No

The data revealed 70 per cent of businesses believe a novated lease would help staff retention alongside attracting new candidates, while only 30 per cent stated otherwise.

More specifically, 44 per cent of businesses believe that a novated lease would help to retain

some existing employees, while a quarter (26%) believe that a novated lease would help attract new candidates.

By State.

Metro found West Australian businesses have the greatest confidence in novated leases to help with staff retention and attract new employees, with 81 per cent stating so. This is followed by:

  • 74% of NSW businesses
  • 74% of South Australian businesses
  • 70% of Queensland businesses
  • 56% of Victorian businesses

More specifically, 56 per cent of WA businesses believe that a novated lease would help retain employees and a quarter (25%) believe it would help attract new candidates.

The data also revealed that businesses in SA are more likely to believe a novated lease would entice new employees (chosen by 47%).

By business size.

The data reveals that small (11-50 employees) and large enterprises (more than 200 employees) are equally likely to believe that a novated lease would either assist in attracting new staff or retain current employees, with . This is followed by 82 per cent of medium-sized businesses and only 51 per cent of micro businesses.

Specifically, medium-sized businesses are most likely to believe that novated leasing would help with staff retention (chosen by 61%), followed by 57 per cent of large businesses and 56 per cent of small businesses.

However, despite the increasing popularity of novated leases and the benefits businesses believe it has on staff retention and recruitment, the survey also found that businesses still need more education around novated lease arrangements.

More than half of businesses don’t understand novated leases

Metro sought to find out how many Australian businesses understand what a novated lease is. Metro asked respondents to choose the answer they believe best describes a novated lease, from the options below. The last option is the only true answer:

  1. A novated lease is simply a long-term business car rental, with the driver responsible for making the rental payments. There is no end to the lease term, and the payments cannot be used as ‘down payments’ on the car.
  2. A novated lease is a car lease by a company. A company is responsible for making payments, but it assigns the car to an employee. At the end of the lease term, the company can choose to pay the balance and own the car outright, or switch to a new car.
  3. A novated lease is where an individual leases a vehicle through a ‘salary sacrifice’ arrangement with their employer. The lease payments and vehicle running costs are made with an employee’s pre-tax pay. At the end of the lease term, the employee can choose to pay the balance and own the car outright, or switch to a new car.

Only 40 per cent of respondents chose the correct (c) answer, leaving 60 per cent of businesses with a false or inaccurate understanding of the increasingly popular employee perk.

By State.

Across the states, Metro found that businesses in South Australia are most likely to have an accurate understanding of novated leasing, with 47 per cent selecting the correct answer. This was followed closely by businesses in Queensland (46%), Western Australia (44%) and NSW (43%). Victorian businesses are least likely to know what a novated lease is, with only 31 per cent selecting the right answer.

The data further reveals that over half (51%) of businesses in Queensland and 48 per cent of Victorian businesses believe that a novated lease is a car lease by a company whereby the company is responsible for making payments whilst assigning the car to an employee (answer B).

By business size.

Metro found that medium-sized businesses are least likely to have a correct understanding of novated leasing, with 76 per cent selecting incorrect answers (A & B).

Micro businesses are most likely to select the correct answer, with nearly half (49%) selecting answer C. This was followed by 48 per cent of large businesses, 32 per cent of small businesses, and less than a quarter (24%) of medium-sized businesses.

More than half (55%) of medium-sized businesses and half (50%) of small businesses are under the misconception that novated leases involve the company making payments towards the lease after assigning it to an employee (answer B).

Lower levels of understanding around novated leases may also lead to a small proportion of businesses being aware that they can benefit from government-backed electric vehicle subsidies, which offers thousands of dollars in rebates, fringe benefits tax, and stamp duty exemptions.

For example, zero-emission vehicles owned by Victorian residents don’t attract luxury vehicle stamp duty rates, rather they pay a flat rate of $8.40 of market value, regardless of the purchase price of the vehicle. Residents in Western Australia can also score a $3500 rebate on new zero-emission vehicles with a dutiable worth of $70,000.

 

On the road: Around the country for incentives for buying electric vehicles

Federally:

  • Battery electric vehicles, plug-in electric vehicles don’t pay customs duties as long as they’re below the luxury car tax threshold.
  • Zero or low tailpipe emission vehicles below the luxury car tax threshold are exempt from Fringe Benefits when financed under a novated lease. This places EVs more in reach of employees who wish to take out a novated lease.

NSW:

  • New and used EVs cheaper than $78,000 do not attract stamp duty.
  • The government’s $3,000 rebate for EVs ends on 31 December, 2023, from when it will invest more in EV charging infrastructure.

Victoria:

  • Zero-emission vehicles don’t attract luxury vehicle stamp duty rates, rather they pay a flat rate of $8.40 of market value, but that is regardless of the purchase price paid.
  • As well, zero and low-emission vehicles can get a $100 discount on annual vehicle registration, but this isn’t available for electric heavy vehicles nor electric motorcycles.

Queensland:

  • There is a $6,000 rebate for individual buyers of new electric vehicles, and up to a $3,000 rebate for businesses. The purchase price threshold is $68,000.
  • Sales of electric and hybrid vehicles save 33% on stamp duty. Find out more here.

South Australia:

  • A limited number of $3,000 rebates and three years’ free registration are available for battery electric vehicles worth less than $68,750. Learn more about the program here.

Western Australia:

  • This state is offering a $3,500 rebate for the first 10,000 buyers of new zero-emission vehicles with a dutiable worth of $70,000. Read the fine detail here.

Tasmania:

  • Tasmania is in between offering incentives for electric vehicle buyers.

Northern Territory:

  • Up until 30 June 2027, a $1,500 stamp duty discount is on offer to those buying new or used electric vehicles, fuel-cell and plug-in hybrids. It’s limited to vehicles having a dutiable worth no more than $50,000.
  • Over that time frame, new and existing battery-electric and plug-in hybrid electric vehicles will enjoy concessions on registration and stamp duty. This applies to cars imported from interstate or overseas, previously registered or modified electric vehicles.
  • Businesses and homeowners are eligible for a $2,500 and $1,000 rebate respectively to purchase and install an electric vehicle charger.

Australian Capital Territory:

  • New and used zero-emission vehicles have two years’ free registration until June 30, 2024.
  • New cars, motorcycles, utility and light commercial vehicles that are zero-emission are stamp duty exempt.

https://www.mynrma.com.au/electric-vehicles/buying/ev-incentives

 

Our Services

Resources

About

Contact Us

Speak to a Broker
1300 362 627
Speak to a Broker
1300 362 627

Our Services

Resources

About

© 2023 Metro Finance