● Finance Structure

Novated Lease Explained

A three-way arrangement between you, your employer and a finance company that lets you pay for a vehicle using pre-tax salary — saving thousands in income tax. Get matched with a specialist who can show you the real numbers.

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Employees

Novated Lease Explained

In a novated lease, your employer takes on the lease obligations on your behalf and deducts payments from your pre-tax salary. This reduces your taxable income, meaning you pay less income tax. Running costs like fuel, insurance and maintenance are often bundled in.

Best for:

Employees (not self-employed) whose employer supports salary packaging. Most tax-effective for higher income tax brackets. Electric vehicles attract particularly strong benefits under current FBT exemptions.

Advantages

✓Payments from pre-tax salary — reduces taxable income
✓Can save thousands in income tax over the lease term
✓Running costs often bundled into one pre-tax payment
✓Drive any car you choose — new or used
✓No GST on purchase price
✓Fixed monthly cost — no surprise bills

Things to Consider

−Requires an employer willing to participate
−Fringe Benefits Tax (FBT) may apply
−If you leave your employer, lease reverts to you
−Not suitable for self-employed or sole traders

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FAQs

Common Questions

Yes. Your employer must agree to participate and deduct lease payments from your pre-tax salary. Many employers already support salary packaging — check with your HR or payroll department.

The lease reverts to you personally. You then have options: your new employer takes over, you continue personally, or you exit the lease. It's manageable but requires planning.

Currently yes. Under the FBT exemption, eligible EVs under the luxury car tax threshold are exempt from FBT in a novated lease — significantly increasing tax savings versus petrol or diesel vehicles.

Yes — new or used, dealer or private sale. Unlike some employer vehicle programs, a novated lease gives you full freedom to choose the vehicle you want.

Novated Lease Explained

Novated Lease Explained

Advantages

Things to Consider

Get Matched With a Broker Who Knows This Structure

Common Questions

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