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What is a novated lease?

A novated lease is a three way agreement between

• The finance provider
• an employer
• and a employee

How does a novated lease work?

Under this a novated lease, the employer pays the monthly car lease rentals on behalf of the employee, and provides the vehicle for the employee to use as part of their salary packaging arrangement.

If employment ceases for any reason, or the novated lease contract is finalised, the Novation ceases and any obligations by the employer revert back to the employee.

Residuals and terms

Click here for a detailed summary of all residual values and balloon structures. Car Lease Residuals

What are the benefits of a novated lease?

• Novated lease terms range from 12 to 60 months
• all costs are paid in pre-tax dollars, a Novated Car Lease can be tax effective
• The Interest Rate is fixed for the term of the novated lease agreement
• Novated lease repayments are fixed for the term
• Lower interest rates due to the vehicle lease being secured against the vehicle
• GST on the purchase price of the vehicle is claimed back by the finance provider on your behalf. This lowers the amount financed to the purchase price minus GST
• Subject to credit approval, we will finance 100% of the purchase price
• Monthly Vehicle Reports that outline important information on how the car is tracking to the program. For added convenience, these reports are emailed directly to you.
• A novated lease is portable and may be re-novated from one employer to another (depending on employer acceptance)
• You can choose the car that best suits your needs
• We can have you in your new car within 24-48 hours
• You will receive great hands on personalised service from an experienced car leasing consultant

Who should consider a novated lease?

A novated lease is suitable for any employee who wants to include a motor vehicle as part of their salary package, so long as their employer offers salary packaging as an option for employees.

What are the tax implications of a novated lease?

GST is charged on the monthly novated lease payment and as long as the employer is registered for GST, they can claim this back on their BAS.

GST is also charged on the residual value on the lease, and as the Novation reverts back to the employee at the end of the lease, the employee is responsible for paying the GST on the residual.

Fringe Benefits Tax (FBT) is payable on the motor vehicle, and this expense is normally passed on to the employee. The amount of FBT depends on the kilometres traveled each year or amount of business use. The higher the kilometres and business use, the lower the FBT.

Where the amount financed is below the Depreciation Limit ($57,180), the employer claims the novated lease payment as a business expense. Above the Depreciation Limit, they claim the interest charges and depreciation up to the value of the Depreciation Limit ($57,180).

Are there any other options?

If you are thinking about doing a novated lease, you may also want to consider a Finance Lease, Commercial Hire Purchase or Chattel Mortgage as other car leasing options.

Need Further Information?

Either complete our friendly enquiry form and we will call you shortly or call the number 1300 Car Lease (1300 227 532) and talk to an experienced car leasing consultant today.

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