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A novated lease is a form of salary packaging. This allows your personal car to be treated like a company car for tax purposes, which can provide you with significant income tax and GST savings. A three party agreement is made between you, your employer and the financier, whereby you enter into a finance lease and a second document called a novation agreement is used to transfer some of your lease obligations to your employer. However, it is important you understand that when you enter into a novated lease you are ultimately responsible for paying for the car. Entering into a novated lease with a lease provider and your employer allows you to access many extra benefits and save thousands across the life of your lease.
- Income tax savings
- GST savings on the purchase price of the car
- GST savings on the running costs of the car, including fuel*
- The best pricing on a new car purchase with the use of a car buying service
- Packaging the car of your choice; new, used or the car you currently own (sale and leaseback)
- The convenience of a fuel card
- Saving thousands of dollars over the life of the lease through repair management
- Complete car management with one regular monthly payment
- Keeping track of your car expenses and usage with your online account
*subject to your employer’s GST status and their salary packaging policy.
We help you to set a budget for all the expenses required to run your car, including the finance, fuel, maintenance, registration and insurance. To maintain your novated lease, your employer deducts a regular payment each pay cycle from your salary and remits the money to pay for all of your car’s running costs.
When the term of your lease has expired, you have a contractual obligation to pay the residual value. The residual value is the pre-determined value of the car at the end of the lease contract including GST, and is set by the ATO. You also have the option to re-finance the lease for a further term.
Who is eligible for a novated lease?
You do not have to be on a high wage or drive long distances to benefit from a novated lease. It’s possible to benefit from a novated lease earning $25,000 or more and mostly using your car for private purposes.
Accessories and extras
When you salary package a car with a novated lease, it is also important to understand what you can and cannot claim for reimbursement.