Novated Lease Australia

Savings vary based on your salary, tax bracket, and the vehicle you choose. Generally, the higher your income tax rate, the more you save. Many people save thousands per year through reduced income tax, GST savings on the car and running costs, and fleet discounts. For EVs, the FBT exemption can mean significantly larger savings.

Yes, and there are significant benefits. From 1 July 2022, eligible electric vehicles, plug-in hybrid vehicles (PHEVs until April 2025), and hydrogen fuel cell vehicles under the luxury car tax threshold for fuel-efficient cars are exempt from Fringe Benefits Tax. This makes EVs particularly attractive for novated leasing.

If you change employers, you have options: your new employer can take over the novated lease (novate the lease to them), you can continue making payments yourself (it becomes a regular car loan), or you can payout or refinance the lease. Most people successfully transfer their lease to a new employer.

A novated lease is a type of salary sacrifice arrangement specifically for vehicles. Salary sacrifice is a broader term that can include other benefits like additional superannuation, laptops, or childcare. Novated leasing focuses on getting a car and its running costs tax-effectively through your salary.

FBT is a tax employers pay on certain benefits provided to employees, including cars used for private purposes. With a novated lease, the FBT liability is often passed to the employee through reduced take-home pay. However, the Employee Contribution Method (ECM) can reduce or eliminate FBT, and EVs are currently FBT exempt.

Yes, this is one of the key benefits. You can bundle fuel, registration, comprehensive insurance, scheduled servicing, tyres, and roadside assistance into your lease. These costs come from your pre-tax salary, providing additional savings. At year-end, any unused funds are reconciled.

No, you typically do not need a deposit. The full cost of the vehicle, including on-road costs and initial running cost contributions, can be included in your lease. However, contributing a deposit can reduce your regular payments if you prefer.

During the lease, the finance company owns the vehicle. At the end of the lease term, you typically have options: pay out the residual value and keep the car, trade it in on a new novated lease, extend the lease, or return the vehicle. Most people pay the residual and keep the car or start a new lease.

While employers are not legally required to offer novated leasing, most are open to it as it costs them nothing and is a valued employee benefit. If your employer does not currently offer it, they may be willing to set it up. We can provide information to help you discuss this with your HR or payroll team.