Novated Lease
A Novated Lease loan is a 3-way arrangement between the employee, the employer and the finance company. The employer is responsible for making the lease payments to the finance company as organised through a Deed of Novation.
The Deed of Novation stays in place until the end of the lease term, or until the employee ceases
employment with their employer.
Fully Maintained Novated Lease
A Fully Maintained Novated Lease loan is an arrangement where all of the running costs of the car are included as part of your salary package. Running costs that can be packaged include:
- Fuel
- Maintenance & Servicing
- Comprehensive Insurance
- Repairs
- Tyres
- Registration
- Car lease rental
A Non-Maintained Novated Lease loan also known as a Standard Novated Lease covers the car lease rental only. The lessee is responsible for all maintenance and other running costs of the car.
Benefits of a Novated Lease
There are many benefits associated with novated leases. This includes:
- The employee can choose to lease a new or used car.
- The car can be leased where there is no business use and only private use.
- When an employee ceases employment with the nominated employer, the employee takes responsibility for the lease payments.
- The car does not appear on the employer’s Balance Sheet.
Added Benefits are
- The lease repayments are fixed over the term of the loan.
- Flexibility in term for the novated lease ranging from 12 to 60 months.
- As the finance company has ownership of the car, they claim the GST on the purchase price. This means that the employee only finances the purchase price excluding GST.
- Under a salary packaging arrangement, the employer can claim an input tax credit for the GST component of the lease payments and other running costs of the motor vehicle.