How Can a Novated Lease Benefit Both the Employee and Employer?

If you work in the corporate world, there may have been a time when your employer introduced a novated lease, which is a car leasing agreement. – Novated lease is popular nowadays with many big-name companies offering this as a benefit for their employees. The main reason why is because all parties involved, the employee and the employer, tend to benefit from this contract. That means everyone walks away happy. In this article, we’re going to show just how the employee and the employer benefits from a novated lease.





With a novated lease, you, the employee will be able to acquire your dream car without having to break the bank to get it. You will get help from your employer and a third-party financier who is the leasing company. The leasing company will help you find the best novated leasing deals available around the country, ideally near your location. Your employer will help you with arranging the payments through a pre-salary tax deduction. Since the deduction is coming from your pre-salary tax, your annual income tax will be smaller compared to when the deduction is after your salary tax deduction. If you don’t include the GST on your payment plan, that will translate to a much smaller monthly payment for your car lease. Plus, after the period is over, you can elect to pay the remaining balance to finally own the car or renew your plan and pick up a new model instead. Either way, it’s a win-win situation for you.





On the employer’s side, the advantages that they will receive from a novated lease are the tax benefits. Once an employee and an employer engage in a novated lease agreement with a leasing company, you can claim the GST as credit. That means as an employer; you will also lower your taxes, as well as minimise some of the costs that are associated with company-owned or fleet vehicles. You’ll also improve your cash flow and give your employees a ten per cent discount on all running costs. To top it all off, you will also get to entice potential employees to apply and work for your company since you offer a novated lease agreement.


So, as you can see, with a – novated lease agreement, all parties walk away happy. That’s why it’s a popular choice for car leasing. Get to know more about novated leasing when you visit our official website.