How novated leasing works
A novated lease is a salary packaging arrangement that lets you pay for a car and its running costs using your pre-tax income. It's one of the most effective ways for Australian employees to reduce the cost of owning a car.
What is a novated lease?
A novated lease is a three-way agreement between you (the employee), your employer, and a finance company. Your employer agrees to make lease payments on your behalf, deducting them directly from your salary before tax is calculated.
Because the payments come from your pre-tax income, your taxable income is reduced — which means you pay less income tax. The savings can be significant, especially for higher income earners.
Unlike a company car, you own the lease. If you change employers, the lease transfers with you. Your employer simply facilitates the salary deductions — they have no ownership of or liability for the vehicle.
Step-by-step process
Calculate your savings
Use our free online calculator to estimate how much you could save. Enter your salary, choose a vehicle price, and see the tax benefit instantly. No signup or credit check required at this stage.
Submit your application
Complete a short online application with your personal, employment, and vehicle details. We'll verify your information and submit it to our finance panel for approval — most applications are assessed within 24–48 hours.
We set up your employer
Once approved, we contact your employer's payroll team to set up the salary deductions. Your employer signs a simple novation agreement — we handle the paperwork so there's minimal effort on their end.
Choose and order your car
Pick any new or used vehicle from any dealer in Australia. We can also help source specific models. Once you've chosen, we arrange the purchase, registration, insurance, and delivery.
Drive and save
Your lease payments and running costs are deducted from your pre-tax salary each pay cycle. You drive your car, we handle the administration, and you save money every fortnight.
Understanding Fringe Benefits Tax (FBT)
When your employer provides a benefit like a novated lease, Fringe Benefits Tax may apply. There are two methods used to calculate the FBT on a novated lease:
Statutory Formula Method
The taxable value is calculated as 20% of the car's original cost, regardless of how much you use it for work vs personal. This method is simpler and often preferred for higher-use vehicles.
Employee Contribution Method (ECM)
You make post-tax contributions towards the lease to reduce or eliminate the FBT liability. Most novated leases use a combination of pre-tax and post-tax deductions structured to minimise FBT while maximising your take-home pay.
Our calculator automatically structures the split between pre-tax and post-tax deductions to minimise your FBT and maximise your savings.
Electric vehicles: zero FBT
Since July 2022, eligible electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) are exempt from Fringe Benefits Tax. This makes novated leasing one of the cheapest ways to get into an EV in Australia.
With the FBT exemption, your entire lease payment can come from pre-tax salary — there's no post-tax component needed. Combined with the GST savings on the purchase price, the total savings on an EV novated lease can be tens of thousands of dollars over the lease term.
Eligibility: The vehicle must be a zero or low emissions vehicle, priced below the luxury car tax threshold for fuel-efficient vehicles, and first held and used on or after 1 July 2022.