A Novated lease allows for your business’ employees to easily lease a car they chose. As their employer you will pay their lease rentals directly to a financier while your employee uses the car.

There are three steps which need to be followed in order to get a Novated lease if you are an employer:

  1. Your first employee will have to choose a car and then lease it from a financier.
  2. Then your employee will sublease this car to you under what is called an operating lease.
  3. Then the employer (you) and the chosen financier will sign an agreement whereby you become responsible for paying the lease rentals to the financier for as long as the employee works for you.

There is a 10% GST on Monthly lease rentals so these can be claimed as ‘Tax Input Credit”.

Novated Leasing benefits to the Employer (you):

  • This is off the balance sheet
  • When the employee leaves the company the car is not your responsibility
  • There are tax deductions for a lease rental
  • You are just concerned with monthly payments
  • The administration of the cost burden is not yours
  • You can direct debit the monthly payments which saves time and also money

The benefits of a Novated lease of an employee:

  • The freedom to pick up a car that they want and be its registered owner.
  • The employee can transfer the lease over to a new employer.
  • The car can be used for private affairs at a controlled and prefixed cost.
  • There is cash savings via a pre-tax salary