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A novated lease is a type of vehicle financing that is commonly used in ‘salary packaging’, which can offer several benefits to the employee, including potential tax perks, flexibility and convenience.
Salary packaging a vehicle through a novated lease is an ATO approved structure that involves three parties: the employee, their employer, and a finance company.
In this arrangement, the employer, employee, and finance company collaborate to streamline the process. Employees select their desired vehicle, and the employer, through a novation agreement with a finance company, takes responsibility for lease payments deducted from the employee’s pre-tax salary. The employee manages all aspects of the lease while enjoying potential tax benefits and flexibility, including the option to transfer the lease if changing jobs. At the end of the lease, various options are available, such as purchasing the vehicle or refinancing the residual value.
With the right structure in place, a novated lease can offer many tax benefits – including lower income tax and no GST on the price of your vehicle or its running costs.
Our MoneyQuest brokers can help you navigate novated leases and other financing options, to find the most suitable solution for your needs.
Reach out to one of our brokers to schedule a consultation and discuss your car loan options today!
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