Novated Leasing: Tax-Saving Vehicle Finance

Every car needs fuel, tyres, maintenance, registration, insurance and in most cases some form of finance. Salary Packaging or a Novated Lease simply lets you pay for these expenses before tax, so you pay less tax and have more money in your pocket.

A Novated Lease is simply an arrangement between the financier, an employer and an employee. The arrangement allows an employee to sacrifice (hence the term Salary Sacrifice) a portion of their salary back to the employer, who uses these funds to pay the vehicle’s running costs. This means the employee pays less income tax, no GST on all running costs including the finance that is salary packaged, whilst retaining full control of the vehicle for 100% personal use.

Convenience and no more big car bills!

You have the choice of including all vehicle running costs to maximise your tax savings. So, you will never have to worry about vehicle bills again. A fuel card pays for fuel, tyres and servicing. When your registration and insurance fall due, simply send them in for payment. A Novated Lease is a great budgeting tool, whilst saving you thousands in tax.

New, used, or multiple cars can be packaged?

A Novated Lease is available on any new, demo or used vehicle. The general rule is the vehicle cannot be any older than 12 years at the end of the lease. For example, a 7-year-old car can be leased for 5 years. You can even take advantage of the tax saving by arranging a Lease-back on a car you currently own or have on finance. There is also the option to have multiple Novated Leases to maximise your tax on vehicles for the whole family.

Who can drive the Car?

You have no restriction on who you allow to drive your car. As long as the driver is lawfully covered under your insurance policy, they are free to drive the car. How much will a Novated Lease save me in tax? Use our Novated Lease calculator, it’s free and we don’t ask for your personal details. This means you can do as many quotes as you like on as many different car prices and salary levels you need.

Can I get a Fleet Discount?

Yes, Our provider Vehicle Solutions is listed on most car manufactures lists as a Novated Leasing provider. Therefore, you automatically qualify for fleet pricing. To save even more try MotorBuys. Motorbuys are partner that allows you to submit an anonymous request for pricing and availability on a new vehicle. The request is sent to every dealership for that make completely anonymously. Dealerships have 24 hrs to submit their best price and availability, then you have 3 days to assess all quotes and make a decision. Car buying made simple without the pressure and stress of negotiating in person with multiple dealerships. By getting a better vehicle price you pay a lower lease payment and therefore save even more.

What’s The Process of Establishing A Novated Lease?

Get a quote on the car of your choice 

Use our online calculator and download a fact sheet to understand exactly how Salary Packaging can save you thousands on driving a car. The calculator only needs a few simple details and you can get a quick quote immediately. No personal details required.

Salary Sacrifice is simply sacrificing a part of your salary back to your employer who will use this money to pay for a non-cash benefit, in the case of a novated lease the benefit is a car. Novated Leasing is Salary sacrifice for a car and is a financial arrangement in which an employee gives up part of their salary in exchange for a non-cash benefit, such as a car. This can be a tax-efficient way for employees to acquire a vehicle. 

Here’s how it typically works:

1. Agreement: The employee and the employer agree on a salary sacrifice arrangement. This involves the employee sacrificing a portion of their pre-tax salary in exchange for a car.

2. Car Selection: The employee selects a car within certain parameters set by the employer or a leasing company. The car is usually provided through a novated lease, where the lease is in the employee’s name, but the employer takes on the responsibility of lease payments.

3. Lease Payments: The cost of the car, including lease payments, insurance, and other associated costs, is deducted from the employee’s salary before tax. This can result in a lower taxable income for the employee.

4. Tax Savings: Since the lease payments are deducted from the employee’s pre-tax salary, they pay less income tax. This can be a significant advantage and is one of the main reasons why salary sacrifice car schemes are popular.

5. Employer’s Role: The employer deducts the agreed-upon amount from the employee’s salary each pay period and uses it to cover the lease payments and associated costs.

6. Duration of the Agreement: The salary sacrifice arrangement is typically for a set period, often 2 to 5 years. At the end of the lease term, the employee may have the option to purchase the car, refinance the lease, or return the car.

It’s important to note that the tax implications and specific details of salary sacrifice car schemes can vary by country and region. Additionally, changes in employment or salary could impact the arrangement, and there may be considerations regarding the employee’s responsibilities in the case of job changes or termination.

Before entering into a salary sacrifice car agreement, it’s advisable to seek financial advice to ensure that it is the right choice for your individual circumstances, taking into account your financial goals and the specific terms of the arrangement.

Electric Cars are the future and new tax changes to Novated Leasing now makes them more affordable than petrol cars.

The Federal Government incentive that now makes all EVs under $89,332 tax-free on a Novated Lease has transformed the EV market in Australia. Watch the video below that demonstrates the power of this tax incentive. This video shows how a Tesla is now more affordable than a Hybrid Corolla.

Electric vehicles (EVs) are an excellent choice for reducing carbon emissions and promoting sustainable transportation. Transitioning to electric vehicles is crucial in combating climate change and improving air quality.

Living the electric vehicle ownership journey involves several key aspects:

1. Vehicle Selection: Choosing the right electric vehicle that suits your needs is essential. Consider range, charging infrastructure, cost, and available incentives. Research different models and compare their specifications and features.

2. Charging Infrastructure: Access to convenient and reliable charging infrastructure is vital for EV owners. Check for public charging stations in your area and ensure that you have access to charging points at your home or workplace. Installing a home charging station can provide added convenience and faster charging.

3. Charging Etiquette: Being mindful of charging etiquette is essential, especially when public charging stations. Try to be considerate by not leaving your vehicle parked at a charging station after it’s fully charged so that others can use the available spot.

4. Range and Trip Planning: Electric vehicles have a range limitation, so you must plan your trips accordingly. Take advantage of range calculators and navigation systems that help identify charging stations along your route. This way, you can plan for charging stops to ensure a smooth journey.

5. Maintenance and Service: Electric vehicles have fewer moving parts compared to traditional internal combustion engine vehicles, which generally results in lower maintenance costs. However, regular maintenance, such as tire rotations, brake inspections, and software updates, is still necessary. Familiarise yourself with the specific maintenance requirements of your EV model.

6. Community Engagement: Engaging with the electric vehicle community can provide valuable insights, tips, and support. Join local EV owner groups, attend events, and participate in online forums to share experiences, learn from us and our partners, to stay up to date with the latest EV advancements.

7. Advocacy and Education: As an EV owner, you can contribute to the broader adoption of electric vehicles by advocating for clean transportation policies and educating others about the benefits of EVs. Encourage friends, family, and colleagues to consider electric vehicles and share your positive experiences. 

By actively embracing and promoting the electric vehicle ownership journey, you play a vital role in driving the transition to sustainable transportation and creating a greener future. Novated Leasing is entirely free to establish and maintain for employers. Our partner Vehicle Solutions will manage the entire rollout and vehicle management. If you are interested in setting up this reward program at your workplace.