What is a Novated Lease?

Essentially, it’s a three-way agreement between you, your employer and a finance company that bundles together all the costs of your vehicle and allows you to pay them using pre-tax dollars.

 

  • Save on your tax
  • Choose the vehicle that's right for you
  • Enjoy a higher disposable income

What are the perks of novated leasing?

For you, the main one is financial. Because your lease payments can be deducted from your income, you'll be able to save big bucks on your tax return at the end of the year. You'll also have full control over which vehicle you choose and if you decide to leave your job further down the track, you'll be able to take it with you.

Common questions about novated leasing

If your employer offers Novated Leasing as a salary packaging option, you can select a vehicle that suits your lifestyle. You can choose the make and model, new or used, sedan, wagon, 4WD, etc., without any of the restrictions usually found with a traditional company fleet. You purchase the vehicle and then enter into a finance agreement in your own name.

Once you've purchased the vehicle, you, your employer and the finance company all sign a Novation Agreement. Your employer agrees to take on your obligations (repayments) to the finance company, and is responsible for all of the agreed vehicle expenses which are deducted from your remuneration as part of your salary packaging arrangement.

You agree to "salary sacrifice" a portion of your earnings in return for the benefit of a car equal to that amount. With a Novated Lease, the lease, running costs of the vehicle and Fringe Benefits Tax (FBT) are deducted from your pre-tax earnings, and PAYG income tax is calculated on your reduced salary. This can effectively increase your net disposable income as you pay less tax.

Novated Leasing offers a range of benefits for both employees and employers.

Novated Leasing offers many benefits for employees:

  • A Novated Lease is both cost and tax effective. Your salary packaged vehicle costs are paid from your pre-tax income. Paying with pre-tax dollars means that you enjoy a lower rate of tax on the benefit than if you were to pay for the running costs of the vehicle using after tax income. You save money.
  • Freedom to select the vehicle of your choice. This is because a salary packaged vehicle is not part of the company fleet.
  • The vehicle is yours to use 100% of the time. The vehicle is yours and there are no restrictions on who can drive it.
  • Your lease and your vehicle are portable. If you change jobs, you can take them both with you and enter into another Novation Agreement with your new employer and the financier.
  • You benefit from any equity built up in the vehicle during the term of the lease. Any profit realised on the sale of the vehicle at the end of the lease is tax-free.
  • Lease repayments are fixed for the term of the lease.
  • You can select flexible lease terms from 12 to 60 months (one to five years).
  • You can select flexible lease residuals, bearing in mind the Australian Tax Office (ATO) minimum residual guidelines for leases and the financier's maximum residual guidelines.
  • Under a Novated Lease, the financier applies an Input Tax Credit (ITC) to remove the GST from the amount financed. This means that your repayments will be lower as you finance a reduced, GST-exclusive amount.
  • Under a salary packaging arrangement all finance and operating costs for the vehicle are known as a "related benefit" and are GST and income tax-exempt.

FOR THE EMPLOYER:

Novated Leasing also offers a number of benefits for employers:

  • The ability to provide more flexible remuneration to employees at little-or-no cost to your business.
  • Significant savings of time and money compared to the administration of a company fleet.
  • Elimination of the residual-value risk of a company fleet.
  • The employer is not responsible for the vehicle if an employee leaves, and is not left with vehicles surplus to requirements.
  • Vehicles provided under a Novated Lease are "off balance sheet" - neither an asset nor a liability.
  • Reduced employee on-costs, such as Payroll Tax and WorkCover premiums.

If you are working full time or permanent part time and your employer supports salary packaging - you're eligible.

  • Vehicle finance
  • Comprehensive insurance (or you can arrange your own)
  • Registration
  • Fuel
  • Maintenance such as servicing, tyres, battery replacement and repairs
  • Roadside assistance

Estimate your repayments

If you are still researching or even daydreaming about your dream car, you can use our calculators to help work out your weekly, fortnightly or monthly repayments. Personalise the amount borrowed, interest rate, term and residual value.

Let's go!

The Stratton Way

We work for you - simple. We take the hard work and stress out of getting a fair and transparent finance deal, so you can own it sooner.

At Stratton Finance, we like to think of ourselves as your very own loan coach.
We work for you - simple. We take take the hard work and stress out of getting a fair and transparent finance deal, so you can own it sooner
We work for you - simple. We take take the hard work and stress out of getting a fair and transparent finance deal, so you can own it sooner

Looking for more information?

We've made it easy for you to find everything you need here.

EXCEPTIONAL, as good as Customer Service gets

I’ll keep this simple, if you want the BEST advice, the BEST service and the BEST product for your c... Product Review

Can't Recommend Highly Enough!!

Have purchased two vehicles through Stratton Finance and each time the service has been fantastic. S... Product Review

Stratton Finance A++

I've purchased 3 vehicles using Stratton and every time it has been hassle free. Not hidden nasties ... Product Review

Meet our network partners

As part of the Carsales network, we have an exclusive panel of specialist lenders and industry partners that will protect and treat you right every step of the way.

Pepper Money

Macquarie

RateSetter

AMMF

Liberty

Westpac

ANZ

Alphera

Latitude

Redbook

Thorn Group

Bank of Queensland

Carsales

Metro

Get Capital

Axsess Today

Carconnect

Finance1

Ready to get started?

Get an instant quote or apply now online.