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Does a Novated Lease save me GST on the car I choose?

Does a Novated Lease save me GST on the car I choose?

Yes, every Novated Lease has a component of GST savings. There are several components to the way GST is handled on a Novated Lease and this article will assist you in maximising the GST you get back.

Firstly, every vehicle sold in Australia by a business (dealership or company vehicle) has a component of GST attached to the final drive away price, however, vehicles sold privately do not. There is no requirement for a private seller to remit GST on their sales transaction back to the Government. With a novated lease the financier (leasing company) claims the entire amount of GST on the vehicle. This means that you only finance the GST exclusive price as outlined in the basic example below;

EXAMPLE – $40,000 drive away price ($3,500 GST Inc) = $36,500 lease finance amount.

Secondly, the lease is deemed by the government to be a service, therefore, GST is applied to each monthly payment. However, as the lease is novated to the employer the employer can claim the GST. So, in essence, you do not pay GST on the car.

By understanding this mechanism you can make a more informed decision about where you purchase the vehicle from. For example – If there are two very similar cars where one is a private sale and the other at a dealership, you can now weight up the differences. If a private sellers vehicle is cheaper than the dealership vehicle by more than the GST then you are better to by the private vehicle. However, if the dealer vehicle is the same or similar to the private sale, being able to claim the GST will make the dealer vehicle a better purchase.

If you would like to see the savings you can make on a Novated Lease please use our Novated lease calculator or call us on 1300 990 880.

If you haven’t found your new car yet but know what you want to try our online new car buying site www.motorbuys.com.au. Motorbuys is designed so that you can choose the exact car in a few simple clicks. Motorbuys is the only site that allows you to choose the exact colour and accessories so that dealers can provide an accurate quote, so you can make a more informed decision.

To obtain a pre-approval on your lease click HERE