Novated Leasing

What is a novated lease?

A novated lease is a form of salary packaging, it is a three way agreement between an employee, an employer and the finance provider.

How does a novated lease work?

Under a novated lease the employee leases a vehicle and the employer takes on the employee's obligations of the lease and pays the monthly lease rentals and collects it from the employee's pre-tax salary.

Novated lease features

• Ability to cost effectively package a vehicle
• Choice of vehicle
• Terms range from 12 to 60 months
• Tax savings as repayments are deducted pre-tax
• Fixed rates for the term of the novated lease
• A novated lease is totally portable to next employer

Who does a novated lease suit?

A novated lease suits any employee who wants to salary package a car. Their employer must be willing to offer the novated lease as an option for employees and sign a "deed of novation".

Novated lease taxation implications

GST is also charged on the residual value on the lease, and as the novation reverts back to the employee at the end of the lease, the employee is responsible for paying the GST on the residual.

GST is charged on the monthly novated lease payment and as long as the employer is registered for GST, they can claim this back on their BAS.

Fringe Benefits Tax (FBT) is payable on the motor vehicle, and this expense is normally passed on to the employee. The amount of FBT depends on the kilometres traveled each year or amount of business use. The higher the kilometres and business use, the lower the FBT.

Where the amount financed is below the Depreciation Limit ($57,180), the employer claims the novated lease payment as a business expense. Above the Depreciation Limit, they claim the interest charges and depreciation up to the value of the Depreciation Limit ($57,180).

ATO motor vehicle fringe benefits tax calculator

Here is the link to the ATO's fringe benefits tax online calculator, use this to calculate the fringe benefits value (FBV) of a motor vehicle. FBV Calculator

Which car financing product is right for you?

Deciding on the right car finance option for your situation can sometimes be confusing. commercial hire purchase, chattel mortgage, car lease are just a few of the car financing options, Platinum Direct Finance can assist with your decision making and make the process simple and easy.

Why use Platinum Direct Finance?

The Platinum Direct Finance group of companies will finance over 800 million dollars worth of equipment and car finance this year! Due to this volume and buying power, we can give our clients access to the best boat finance rates and boat financing products across Australia.

Novated Lease Brochures

Need further information?

If you require further car finance or car leasing assistants, either complete our friendly enquiry form or call an experienced finance consultant on 1300 554 553 today.

Enquire Now Apply Now Instant Quote