A novated lease is a popular vehicle financing option, often used in salary packaging. It offers potential tax benefits, convenience, and flexibility for employees.

Approved by the Australian Taxation Office (ATO), a novated lease involves three parties: the employee, their employer, and a finance provider. The employer takes responsibility for lease payments through a novation agreement with the finance company, while these payments are deducted from the employee’s pre-tax salary.

Employees enjoy the freedom to choose their vehicle and manage its lease. The structure can offer tax advantages, such as reducing taxable income and avoiding GST on the vehicle purchase price or its running costs.

At the end of the lease, employees can purchase the vehicle, refinance the residual value, or upgrade to a new lease. If they change jobs, the lease may be transferred, depending on their new employer’s agreement.

A novated lease is a practical and cost-effective way to manage vehicle financing.

Our brokers can guide you through the process and help you explore options tailored to your needs. Contact us today to learn more!