Novated Leases are the finance arrangement that allows any employee to Salary Package or Salary Sacrifice a car for private or business use through their employer.

This is a tri-party arrangement between the leasing company, an employer and an employee. The arrangement allows an employee to sacrifice (hence the term Salary Sacrifice) a portion of their salary back to the employer, who use this money to pay the vehicle’s running costs. Therefore the employee has a lower taxable income, pays less income tax and benefits from the employer’s GST claim, whilst retaining full control of the vehicle for 100% personal use or business use where applicable.

What’s the process and how does it work?

The Car

You get the choice of vehicle that best suits your needs. You can pick any new, demo or used car as opposed to the normal restrictions found with company cars. We can assist you to purchase the car and then enter into a lease agreement in your own name.

Once the car is ready and the finance is approved, you, your employer and the finance company all sign the lease Novation Agreement. Your employer agrees to take on your obligations (repayments) to the finance company and is responsible for all of the agreed vehicle expenses which are deducted from your remuneration as part of your salary packaging arrangement.

You agree to “salary sacrifice” a portion of your earnings in return for the benefit of a car equal to that amount. With a Novated Lease, the lease, running costs of the vehicle and Fringe Benefits Tax (FBT) are deducted from your pre-tax earnings, and PAYG income tax is calculated on your reduced salary. This can effectively increase your net disposable income as you pay less tax.

The Novated Leases are distinct from Salary Packaging. Salary Packaging is the payroll process of deducting the agreed amount from an employees gross salary to put towards the vehicle lease and running costs. This process also involves the employer and a Salary Packaging provider such as Vehicle Solutions Australia reporting on the FBT and GST transactions.


How much tax will Novated Leases save me?

To get an accurate idea on how much tax you can save use our Novated Lease calculator, it’s free and we don’t ask for your personal details. This means you can do as many quotes as you need on as many different car as required.

Can I get a bigger car discount using Novated Leases?

Yes, Vehicle Solutions Australia is listed on most car manufactures lists as a Novated Leasing provider. Therefore you automatically qualify for fleet pricing. To save even more go to Motorbuys is our online automated vehicle buying site, that allows you to source the best new car prices without the pressure and stress of negotiating in person with multiple dealerships. By getting a better vehicle price you pay a lower lease payments and therefore save even more.