novated lease

A novated lease is an agreement between your employer, yourself (the employee) and the financier, where the obligation to meet the repayments under the finance lease is with the employer.

With a novated lease agreement, you own the vehicle and have the right to take it with you should you change jobs and, structured correctly, there may be tax advantages with your remuneration package.

As with other leasing structures, repayments with a novated lease are flexible and amounts depend on the term, interest rate, amount borrowed and the residual payment.

Benefits of a novated lease for the employee include:

• Vehicle can be financed using pre tax dollars
• The vehicle may be leased for 100% private use
• The option to own the vehicle at the end of the novated lease term

Benefits of a novated lease for the employer include:

• An easy and cost-effective way to add value to an employees remuneration package
• Time and costs associated with management and disposal of the vehicle are not the employer's responsibility
• On termination of the employees employment or novated lease, the responsibility of the vehicle is passed on to the employee

Other issues that need to be addressed before commencing with a novated lease include:

• Salary Costing
• FBT (fringe benefits tax) calculations
• Fuel costs, maintenance costs calculation
• Current vehicle disposal  

Please note: We are not able to offer advice regarding novated leases and whether they suit your circumstances. The information provided is for information purposes only.