Why do a novated lease

Novated leasing explained. What is a novated lease? Watch our introduction video to find out how you can save with a novated lease from LeasePlan. A novated lease is a tax-effective agreement between you, your employer and LeasePlan that lets you lease a vehicle of your choice.

You finance the vehicle and its operating costs with a combination of before and after-tax salary. The obligation for the payment of lease rentals is transferred novated from you to your employer for the term of the agreement. Your employer makes the necessary deductions via payroll and pays the lease rentals and operating costs directly to LeasePlan. This is known as salary packaging.

You retain ultimate responsibility to make any payments under the lease in the event that you leave your employer or if your employer fails to make payments on your behalf. Employee gets the car they want, saving on tax and running costs including car price, fuel, maintenance and tyre purchases. You are using an old browser that may not function as expected. For a better, safer browsing experience, please upgrade your browser.

Novated Lease Toggle navigation Novated Lease. Novated Calculator What is a Novated Lease? What is a Novated Lease? How does it work? Lease set up Employee chooses a car, and a novated lease arrangement is set up between the employee, employer and TFM. Payments made Employer makes payments to TFM from the employee's salary. Employee saves Employee gets the car they want, saving on tax and running costs including car price, fuel, maintenance and tyre purchases.

Cashless motoring Employee enjoys the convenience of cashless motoring. What is included? A novated lease is a way you can finance a new or used car. This can effectively reduce your taxable income. With a novated lease, you can use your car for personal use. Your income, the cost of your car and ongoing running costs each year will decide how cost-effective a novated lease may be for you.

The result will be that your taxable income is reduced. The benefits also depend on the way your lease is structured. Some leases may package car expenses such as registration, fuel, tyres and insurance together so your repayments cover these, too. If you are not on the highest marginal tax rate, this can be cost effective because fringe benefits tax which is based on the highest marginal tax rate may not have to be paid to your employer from your pre-tax salary in addition to the novated lease payments.

Novated leases can effectively mean motoring costs are goods and services tax GST free for employees. The GST you would ordinarily pay on the purchase price is covered by the finance provider and they can claim an input tax credit.

If running costs are included in your novated lease, these can be packaged to employees with their lease payment without GST as the employer claims this tax component back as an input tax credit.