A novated lease is an agreement between you, your employer and a leasing company (like us at Leaselab!) that allows you to pay for a car and its running costs out of your pre-tax income.
Because of this, you can save thousands of dollars in income tax and GST each year, simply by novating your car.

Check out our complete guide to Novated Leasing for more information.

A novated lease provides a long list of benefits, but here are a few noteworthy ones:

• Saving up to $6,334 in GST from the price of the vehicle
• Saving on GST for all of the vehicle’s running costs, including fuel, servicing, registration and insurance
• Reducing your tax bill by paying for the cost of the vehicle and its running costs using your pre-tax income

Also, as everything is pre-budgeted, you’ll have a smoother outlay of costs and avoid bill shock. So you can easily manage your monthly cash flow.

There are plenty of reasons an employer should offer novated leases to their staff:

• Novated leases create a more attractive employment package without any additional cost to the business
• This added financial and lifestyle benefit can help your employees feel valued and rewarded at work
• This benefits the business as a whole by increasing employee satisfaction and retention
• The novated leasing process is 100% cash-neutral for your company
• The financial commitment for the lease contract remains with the employee, not your company - so there’s no big financial risk to the company

And on top of all of that, it’s unbelievably easy to set everything up. Just give us a call and we’ll let you know how it works.

No, they’re very different!

A car loan comes out of your post-tax salary, so you pay for the loan after you’ve paid tax on your earnings. That means there’s no financial benefits when you purchase a vehicle using a car loan.

Whereas a novated lease and the vehicle’s running costs come out of your pre-tax salary, which can significantly reduce your tax bill.

So while a novated lease will save you thousands of dollars every year, a car loan is just an additional cost with no associated savings.

Yep, it sure can! Novated leases are designed to help savvy car buyers reduce their taxable income by allowing them to pay for a car out of their pre-tax salary (it’s sometimes called a ‘salary sacrifice’).

This means you’re getting your next car but saving on a lot of the tax around the vehicle costs.

If you want to see how much money a novated lease will save you, check out our novated leasing calculator.

You can include the car plus its running costs. That means fuel / electricity, servicing, tyres, insurance, roadside assist and even your registration.

The more you include, the bigger your tax savings.

But we’re also super flexible – some people like to arrange their insurance or servicing separately, and that’s okay.

At Leaselab, our novated lease plans cover three popular options (just the car, the car + everything, the car + your specific inclusions) with a simplified comparison to help you weigh up the benefits of each. Check out our novated lease plans here.

It’s important to note that some items are not considered to be legitimate car operating costs by the ATO and are therefore unable to be included in a novated lease. 

These items include, but are not restricted to, road tolls, parking expenses, fines and infringement costs, and vehicle options or accessories fitted after the delivery of the car.

At the end of your lease, there will be an amount of money owing on the lease that needs to be paid. This is referred to as the ‘residual’ or ‘balloon’. In essence, the residual value is a conservative estimate of what your car will be worth at the end of the lease term.

Under ATO regulations, a novated lease must always include a residual value and the ATO has specified formulas that must be used to calculate this residual value. More often than not, the ATO-specified residual value is lower than the actual market value of a car at the end of a lease.

This means that most people end up in a strong position at the end of a lease, as they can sell the car for more than they owe on the residual. And if you choose to sell the car at the end of a lease, any money you make above and beyond the residual value is yours to keep, tax-free!

Another advantage of the residual is that it helps to keep your lease payments low. This is because your lease payment is not calculated on the total cost of the car, but on the cost of the car less the residual.

Fringe benefits tax (FBT) is a tax the government places on any perk or benefit you receive from your employer related to personal use. In other words, if your employer pays for something that you use in your personal life, the government charges a tax on its value.

Before FBT existed, employers got into the habit of paying personal “life expenses” - like school fees, house bills and mortgage repayments - for employees before declaring how much they paid them. This resulted in the employee paying less income tax, which was great for the employee but not so good for the government. That’s why FBT was created in the first place.

Coming back to novated leasing, any situation where your employer pays for a car on your behalf that you use outside of work will result in an FBT tax. Novated leases create this liability too, however, we counteract it by using part of your post-tax salary along with your pre-tax salary.

We refer to this post-tax salary sacrifice as an “employee contribution”.

We specialise in looking at your unique circumstances and calculating the exact amount of employee contribution you need to make to offset any FBT liability for your employer.

Give us a call and we’ll happily explain how it all works!

If you’re looking for a new or used car and you’re a PAYG employee on a regular salary, then it’s definitely worth considering a novated lease. It provides a long list of benefits, including a reduction in your tax bill.

But don’t think you have to buy a new or used car to tap into the benefits of novated leasing!

If you’ve already got a car, you could still be eligible for a novated lease. As long as your car is either less than 12 years old at the end of the lease agreement or a classic car, you can get what’s called a ‘Sale and Leaseback‘ novated lease, keep your own car and start reducing your tax bill immediately.

You most certainly can! If you want to lease a used car, the process is the same as a new car – we just skip needing to order your car, because you’ve already found an existing car you want.

There are some restrictions on the car you can buy, so we suggest reading our page about novating a used car for more information.

Yes, as long as your car is either less than 12 years old at the end of a lease agreement or is a classic car, you can get what we call a ‘Sale and Leaseback‘ novated lease, keep your own car and start reducing your tax bill immediately.

Don’t think you need to get a new car to experience the benefits of a novated lease!

New cars, used cars and even currently owned vehicles are eligible as novated lease vehicles. There are some minor rules from the ATO to be aware of:

• The car can’t have a carrying capacity of more than one tonne (although this can be offset by accessories when it comes to vehicles like utes)
  
• The car can’t be designed principally to carry a large number of passengers (i.e. it can’t be a minibus). Anything with a carrying capacity of less than eight seats is fine.
  
• Generally, financiers don’t like to finance cars that are older than 12 years at the end of the lease (so for a 3-year lease, the car can be a maximum of nine years old). There are exceptions for classic cars.

Under a novated lease, the financier technically owns the car – you’ll be leasing it off them for the lease term.

However, it’s registered in your name and you can drive it like it’s your own. Plus, at the end of your lease, you can choose to pay off the remaining balance (called the ‘residual’) and own your car outright.

Logbooks are used for calculating the business use for a car – so if you don’t use your car for business, you don’t need to keep a logbook. 

It’s ok to have a novated lease for personal use! So, the answer is no – you don’t need to keep a logbook if it’s not a business vehicle.

If you do use your car for business, you’ll only need a logbook if you choose the operating cost method to calculate your fringe benefits tax (FBT). Under this method, you’d need to keep a log book for 12 weeks during the lease term (so if you have a 5-year lease, that’s 12 weeks in 5 years).

Don’t worry: we’ll ask you a few questions to assess your situation and let you know which FBT calculation method is the best option for your unique situation.

The short answer is: no.

We’ll always need your employer’s approval to get you onto a novated lease – because your employer needs to make the payments on your behalf out of your pre-tax income.

By “employer”, we mean that you are a PAYG employee. So, if you are a small business owner, provided you pay yourself through PAYG and not director’s fees, you will still satisfy the “employer” requirement.

If you don’t have an employer, you might like to look at a chattel mortgage or a secured car loan to get into a new car, but it’s important to know that you won’t make any tax savings on these products.

That’s not a problem at all. We can quickly and easily transfer your existing lease over to your new employer. Just let us know and we’ll work with them directly to get it all sorted.

And if you leave your job without another job lined up, then you’ll need to keep making the regular payments yourself until you find a new role. You won’t make any tax savings for that period, but outside of that you can still operate the novated lease as per usual until you find your next job.

No, you don’t. Because everything is handled online or over the phone, you’re free to choose any novated lease provider in Australia. Novated leasing is specific to the Australian tax system and does not exist in many other parts of the world. So your novated lease provider should be Australian.

If you’re an employer and would like to have one of our novated leasing experts come to your offices and talk to your team about how it works, we’d love the opportunity to do so.

No, a novated lease doesn’t add tax complexity because your payments are handled by your employer. Come tax time, all you need to do is submit your tax return as you normally would.

Your vehicle expenses are rolled into your novated lease and are taken care of by your employer in your payslips. In addition, our vehicle reports will help you to complete your tax return if you’d like to go a bit deeper.

For a new car on a novated lease, we’ll:

1. Give you a quote: It’s obligation-free and includes a 10-15 minute chat over the phone to explain how it all works.
2. Get your finance pre-approved: You complete a finance pre-approval application, and we get you green-lit for finance while you choose a car.
3. Reserve your car: You tell us which car you want, and we’ll help you secure your vehicle.. More often than not, we can get you wholesale pricing through our networks (which is handy if you really want any upgrades, like leather seats).
4. Send you some paperwork: You and your employer complete some paperwork while we organise the final payment for your vehicle. Then we’ll notify your employer to begin your lease deductions out of your monthly salary.
5. Welcome you aboard: We’ll give you your welcome pack with details on how to look after your car (and your fuel card, if you’ve chosen to include fuel).

This is the condense version, but you can read about the process in more detail here: ‘Steps to getting a novated lease car’.

On average, it takes around 1-2 weeks. It really depends on if your employer is set up for novated leasing, how long it takes to find the car you want, and whether or not it’s in stock.

If your employer doesn’t offer novated leases yet, we can guide them through it and get them set up pretty quickly. We’ve got a handy novated leasing employer guide that tells them what to expect.

If you’ve been turned down for a novated lease due to bad credit, be sure to ask why. 

Learning what went wrong tells you what you need to improve in order to get approved the next time, and if it’s something small, it’s possible it can be corrected.

If you have a major issue with unpaid credit, then you may not be eligible for a lease and it might be a better idea to focus on how to fix the underlying problem with your finances first. We’ll never encourage you to get into a lease if we feel that it’s not the best decision for you.

It’s worth noting that different financiers treat credit issues in different ways. While one financier may turn you down, another may not have a problem. We have access to a number of sources of finance, so may well be able to find a financier that is able to assist in your circumstance.

Yes, absolutely! We pride ourselves on top notch service, so we’re always here to help you.

We have an innovative client portal that you can log into anytime you want, which has all of the reports you might need, including showing your account balance and all transactions that have taken place on your account up to that date.

We’ll continually monitor your novated lease account to ensure that you are spending in line with what you initially estimated, and that your expenses on your car are in line with the established budgets.

If there’s a discrepancy that is consistent over a period of a few months, we’ll get in touch with you to suggest and discuss a remedy. This may involve an amendment to your salary deductions, but rest assured that this can only occur with your specific written approval.

If you wish to allocate additional funds to your novated lease over your lease term, don’t hesitate to get in touch with our team who can set this up for you e.g. increasing a fuel budget for a long road trip with the family!

You can submit your receipts for reimbursement and payment through our client portal. Alternatively, you can download the expenses claim form here (or contact us for a copy).

Fill out the relevant sections of the form, sign it and send it (along with the tax invoice and/or tax receipts) to clients@leaselab.com.au, and we’ll process the reimbursement for payment.

Please note that we can only process the reimbursement for payment if we have the required documentation and there are sufficient funds in your novated lease account.

Where there is additional documentation required, or there are insufficient funds in your account, we’ll contact you directly to discuss your options.

If you change employers while you’re on a novated lease, your new employer just needs to agree to continue making your novated lease payments from your pre-tax salary.

If your new employer gives the all clear, we’ll get them to sign a new novation agreement and approval document, which simply says that they’ll make payments on your behalf while you’re employed with them.

Then we’ll give your new employer the pre-tax and post-tax deduction numbers to enter into their payroll system, and that’s it - we’re done.

We’ll be happy to chat to your new employer to walk them through the process, and we’ve got a free novated leasing employer guide if they prefer reading the details online.

Your old employer will stop paying your lease when they stop paying your salary.

At the end of the novated lease term, you have several options to choose from:

1. Pay off the residual value and keep your car.
2. Trade your car in and get a new vehicle with a new novated lease.
3. Sell your car and use the money to pay the residual value, and pocket the difference as a tax-free profit. Then get yourself into a new vehicle on another novated lease.
4. Refinance by turning the residual value into a new novated lease with significantly reduced payments.

Most of our clients like to sell their car and hop into a new one by setting up a new novated lease when the previous one ends, and we can help you sell the car without any hassle.

Renewing your lease is quicker because we’ve already got your details.

We’ll give you a call between 3-6 months before your novated lease ends to chat through your options and get the process moving so that it’s a quick transition. Most people are excited to jump into a new car, but if you don’t want to renew, you don’t have to.

We can always help you sell your car to pay off the residual. Or, if you want to sell your car on your own that’s no problem too. Just let us know what you choose, and we’ll help you get it done.

You can cancel your novated lease at any time.

You just have to pay the remaining lease payments and the residual value. If your lease has been running for a while, chances are that the value of your car will be higher than the amount owing, so you will be able to sell the car and pay off the lease.

If you want to end the lease in its early stages, the car may well be worth less than the outstanding amount, so you will have to put some of your own money in.

It’s worth noting some financiers might charge break fees for ending the lease early.

It’s rare that a customer would want to end a lease early (because they miss out on pre-income tax savings), but it’s definitely possible and we’d arrange this with the financier for you. 

And of course, we’re always happy to chat through your options first. It’s important to note that if you lose your job, you can take on the lease payments yourself until you find a new job, and then transfer your lease to your new employer when you’re ready.

If you’ve taken out insurance with our fleet insurance provider, please contact our insurance underwriter (Mercurien) on 02 8123 6902. Use your registration number as the reference. They’ll take you through the whole process so you can make an informed decision on what you’d like to do.

If you’ve insured your car through your own insurer, you’ll need to follow the process outlined by them.

The beautiful thing about novated leasing is that it doesn’t cost you a thing. There are no admin fees, and no cost to your business.

You can help your employees reduce their tax and maximise their income for free - and they’ll love you for it!

Setting up novated leasing is surprisingly simple. We try to keep the paperwork to a minimum.

There’s a short novation agreement that needs to be signed, which simply says that you’ll make payments on your employee’s behalf while they’re employed with you.

Then we’ll provide the pre-tax and post-tax deduction to enter into your payroll system. And that’s it - you’re done.

Once you’re set up it’s set-and-forget, since it comes out of the pay cycle automatically each month. We take care of the reporting and record keeping and can help your payroll team to set up the deductions.

Want all the detail? We’ve mapped out the process in our free novated leasing employer guide.

There’s a short novation agreement that needs to be signed, which simply says that you’ll make payments on your employee’s behalf while they’re employed with you.

Additionally, most employers like to direct debit the payments, which we help set up. If you choose this option, you only need to sign the usual direct debit terms and conditions. But that’s it.

We won’t hold you to any exclusivity agreement. We don’t believe in them, because we know our service makes us the provider of choice for thousands of companies all over Australia.

Unlike a lot of providers, at Leaselab we don’t have minimum staff requirements.

We help organisations of all sizes, including government bodies and global corporations. But we particularly delight in the chance to help SMEs to optimise their offering and offer new perks for their staff.

We know that salary sacrificing – and particularly novated leasing – can make the world of difference to smaller businesses who are trying to build a strong culture and striving to improve their team’s experience.

So if you’re paying your staff through a PAYG structure, then they’ll be eligible for a novated lease, which we’d love to help you facilitate – regardless of your size.

We’ll work on a solution that results in a $0 FBT liability for your business. And if you’re an FBT-rebatable employer, we can provide you and your staff with the most cost-effective solution that takes this into consideration.

Our FBT reporting gives you all the details and will save you any hassle come tax time.