Novated Lease
Drive More. Pay Less. Save on Tax.
1800 678 880Mon–Fri 8am–6pm AESTA novated lease lets you pay for your car from pre-tax salary, reducing your taxable income, saving GST, and bundling running costs into one simple payment.
- Compare 30+ lenders without touching your credit file
- Soft enquiry only — no credit checks until the right option is on the table
- Decisions in as little as 24 hours
What Is a Novated Lease and How Does It Save You Money?
A novated lease is a three-way salary sacrifice arrangement between an employee, their employer, and a finance company, allowing employees to lease a vehicle using pre-tax salary, reducing their taxable income and overall cost of vehicle ownership. Your employer agrees to make lease repayments on your behalf, deducting them from your pre-tax salary before calculating income tax.
The result? You pay less income tax each pay cycle, and your effective cost of owning and running the vehicle is significantly reduced compared to buying a car with after-tax money.
Running costs, fuel, insurance, registration, servicing, and tyres can all be bundled into a single fortnightly payment from your pre-tax salary. Compare this with standard car finance or leisure finance to see which suits your situation. For business owners, explore how a novated lease interacts with your working capital planning.
Pre-Tax
Salary deductions
No GST
On purchase price
1–5 Yrs
Flexible lease terms
Key Benefits
Reduce Your Taxable Income
Lease repayments are made from your pre-tax salary, reducing the income you pay tax on and increasing your take-home pay.
Save on GST
You pay no GST on the purchase price of the vehicle (up to the luxury car tax threshold), saving you 1/11th of the purchase price upfront.
Bundle Your Running Costs
Fuel, registration, insurance, servicing, and tyres can all be included in your lease package and paid from pre-tax salary.
Drive Any Vehicle
Choose any new, demo, or eligible used vehicle with no restriction on make or model (within market value limits).
Flexibility at End of Lease
At the end of the lease term, you can upgrade to a new vehicle, extend the lease, or pay out the residual and take full ownership.
It Travels With You
Your novated lease stays with you if you change employers. Simply novate the lease to your new employer and continue saving.
How It Works
Getting into a novated lease is simpler than you think. Here’s the process.
Check eligibility
You need to be employed (full-time, part-time, or contract) with an employer willing to participate. Most employers support novated leases.
Choose your vehicle
Select any new, demo, or eligible used vehicle. Our team can also help you source a vehicle at fleet pricing.
We calculate your savings
We prepare a detailed cost comparison showing your after-tax savings, FBT position, and total cost of ownership over the lease term.
Employer agreement
We manage the novation agreement with your employer. Their involvement is minimal, we handle all the paperwork.
Drive away & save
Your repayments and running costs are deducted from your pre-tax salary each pay cycle. Sit back and enjoy the savings.
Who Is It For?
A novated lease works best for Australian employees who:
- Are employed full-time, part-time, or on a contract
- Have an employer willing to participate (most do)
- Pay income tax and want to reduce their taxable income
- Are planning to purchase a new, demo, or eligible used vehicle
- Want to simplify their vehicle running costs into one payment
- Are looking for flexibility at end of lease, upgrade, extend, or own
Important: Tax savings depend on your individual income, vehicle choice, and usage. We recommend speaking with your accountant alongside our specialist brokers to confirm the savings in your specific situation.
Frequently Asked Questions
Do I need my employer's permission?
Yes. Your employer must agree to participate and make the salary deductions on your behalf. Most employers support novated leases as they come at no cost to the business and are a valued employee benefit.
What happens if I change jobs?
Your lease travels with you. You simply novate it to your new employer. If you cannot novate immediately, the lease payments convert to post-tax until a new arrangement is in place.
What is the Fringe Benefits Tax (FBT) implication?
A novated lease creates an FBT liability on the private use of the vehicle. This is managed through the Employee Contribution Method (ECM), where you make a post-tax contribution to offset the FBT, which is typically far outweighed by your pre-tax savings.
Can I use the car for personal use?
Yes. Unlike some business vehicle structures, a novated lease allows unlimited private use. The FBT framework is designed to account for private use.
What running costs can I include?
Fuel, registration, insurance (comprehensive), servicing, tyres, roadside assistance, and car washing can typically be bundled into your lease package and paid from pre-tax dollars.
What happens at the end of the lease?
You have three options: (1) upgrade to a new vehicle and start a new lease, (2) extend the current lease, or (3) pay the residual value and own the car outright.
Is there a limit on vehicle value?
The Luxury Car Tax (LCT) threshold applies. For FY2025–26, vehicles above $80,567 (or $91,387 for fuel-efficient vehicles) are subject to LCT, which reduces your GST savings on the portion above the threshold.