Novated Leasing
Package your next car through your salary.
A novated lease is a three-way agreement between you, your employer and a lease provider. Your employer takes the lease payment out of your salary before tax, and the running costs of the car can be bundled into the same payment. You choose the car, and you keep it if you change jobs, with the lease reverting to you.
Whether a novated lease works out better than a normal car loan depends on your income, how much you drive and the car you pick. A Business Manager can run those numbers with you.
Work out your repayment
Novated lease quotes are produced by the lease provider, using your salary, the car you are after and your expected kilometres. Your Business Manager will get that started for you.
Talk to us about novated leasingYour novated lease provider confirms the final quote and the figures that apply to you.
How a novated lease works
You pick the car. The lease provider buys it and leases it to you, and your employer agrees to make the payments out of your pay. Because the payment comes out before tax, your taxable income drops, which is where most of the benefit comes from. Running costs such as registration, insurance, servicing and tyres can be bundled into the same payment so the car is one predictable deduction rather than a series of bills.
At the end of the term there is a residual amount set by ATO guidelines. You can pay it out and keep the car, refinance it, or trade the car in and start again. Your accountant or financial adviser is the right person to tell you whether the arrangement suits your circumstances.
Business and ABN options
If the car is for business rather than salary packaged, your Business Manager can also arrange a chattel mortgage or a finance lease. A chattel mortgage puts the car in your name from day one with the financier holding security over it, and businesses registered for GST may be able to claim an input tax credit. A finance lease keeps the car with the lessor and leases it to you for a set term with a predetermined residual.
Which one suits depends on how the vehicle is used and how your business is structured, so it is a conversation with your accountant as much as with us.
Common questions
Do I need my employer to agree to a novated lease?
Yes. A novated lease is an agreement between you, your employer and the lease provider, so your employer has to be willing to make the deduction. Most large employers already have an arrangement in place.
What happens if I change jobs?
The lease reverts to you. You can take it to a new employer if they will novate it, or keep making the payments yourself. The car is yours to keep either way.
Can I novate a used car?
Usually yes, subject to the provider's age and kilometre limits. Ask your Business Manager which cars in stock qualify.
Is a novated lease better than a car loan?
It depends on your income, how much you drive and the car. The tax benefit grows with your marginal rate, but a lease carries fees a straight loan does not. Run both numbers before deciding.
Talk to a Business Manager
Book an appointment Browse carsThe information on this page is general in nature and does not take your objectives, financial situation or needs into account. Novated leasing benefits depend on your personal circumstances and your final quote is confirmed by your novated lease provider. You should seek your own financial and tax advice.
