Ask The Experts > Novated Lease

A novated lease is a three way agreement that exists between employer, employee and the financier. There is an obligation from your employer for the repayments to be made by out of the employee’s pre – tax salary, however the ownership of the vehicle is retained by the employee.

With a novated lease agreement, the vehicle is owned by the employee and the employee has the right to take the lease with them, if they change jobs. When structured correctly there will also be tax advantages with the employees remuneration package.

The Benefits of a Novated Lease

Benefits of a novated lease for the employee include:

• Greater flexibility with the choice of a vehicle
• Financing of the vehicle may be paid with pre-tax dollars
• Option to own the vehicle at the end of the novated lease term
• The vehicle may be leased for 100% private use
• More than one vehicle may be leased with employer consent

Benefits of a novated lease for the employer include:

• An easy and cost-effective way to add value to an employees remuneration package
• Time and costs associated with management and disposal of the vehicle are not the employer's responsibility
• On termination of the employees employment or novated lease, the responsibility of the vehicle is passed on to the employee

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