Novated Lease

What is it?

A novated lease is a lease between an employee and the lease provider which is paid by the employer. It allows for the employee to source a vehicle and have it paid through their pre- tax pay. The lease obligation ultimately vests with the employee but the payments are managed by the employer.

Equipment commonly leased with Novated Lease


Provides incentive for employee
Removes risk for vehicle i.e if
employee leaves they take lease
obligation with them
Choice of car
Salary packaging service for employee
No equipment or underlying lease risk
Packaging and online FBT reporting
Income tax savings
GST savings on car
Car moves with you to your next
Unrestricted private use.


Can be misconceptions about how the
agreement is going to work
Employees pay FBT on the vehicle
- the more KM’s driven, the less FBT
Employee is responsible for the vehicle
upon termination of the employees

What type of business uses Novated Lease?

Businesses who have a current equipment lease and need a ‘like for like’ replacement.

Tax and accounting treatment for Novated Lease

Subject to type of facility selected, see Commercial Hire Purchase, Finance Lease,
Chattel Mortgage.


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