• Novated leasing FAQs

  • All your novated leasing questions answered

    A novated lease is an easy, cost-effective way to get into the car of your choice. It provides access to income tax and GST savings, fleet buying power and more.

    View some of the most commonly commonly asked questions about novated leasing below. Got more questions? Chat with a novated specialist today. We’re here to help.

    1. Is there a limit to the car I can novate?
    You can lease a new, used or demo car. You can even lease your current car.
     
    If you wish to novate a used car, there are some conditions to consider:
    • The car is no more than 8 years old at the end of the term
    • The car has no more than 300,000kms on the odometer at the end of the term.

    Learn more about novating a used car here.

     
    Note: Novated leasing isn't available for commercial vehicles (such as utes with greater than 1 tonne payload, or vehicles that carry 9 or more passengers). 
    2. Do I have to drive a certain amount of kilometres?
    No. In the past, Australian laws did make it more tax effective for those who drove further, but that changed in 2014. The FBT is now a flat rate which means there is no longer a minimum driving requirement.
    3. How do I check for myself that this is a cheaper way for me to get a car?
    When comparing the numbers on your LeasePlan quote to any other way of buying a car, make sure you take into account fuel, insurance, servicing, replacement tyres... everything you pay to keep a car running. Also consider the GST-free elements and the income tax benefits. It all adds up and novated leasing is almost always cheaper. It’s always recommended that you seek independent financial advice. To see how much you could potentially save, check out our novated leasing calculator now.
    4. What happens at the end of the lease?
    At the end of your novated lease, you’ll have what’s called a ‘residual value payment’ due. This amount, determined by the Australian Taxation Office, represents the remaining balance on your vehicle at that time.
     
    Towards the end of your lease, we'll be in touch to help you understand your options and plan ahead. You’ll have a few choices, including:
    1. Upgrading and novating a new car with LeasePlan
    2. Extending your current lease term to continue receiving your tax and GST savings
    3. Paying out the residual value and owning your car outright
    4. Getting LeasePlan to help you sell the car through our auction partner the end of your lease
    5. Do What is FBT and ECM?
    Fringe Benefits Tax (FBT) applies to novated lease vehicles. It is applied at the same rate for all, regardless of kilometres travelled. Except for electric vehicles (EVs) eligible for FBT exemption.
     
    LeasePlan uses the Employee Contribution Method (ECM) on novated leases where FBT applies.
     
    With ECM, a portion of the vehicle lease cost is deducted as an ‘employee contribution’ from post-tax salary, effectively eliminating the FBT and improving the tax effectiveness of the arrangement.
     
    Reducing or eliminating the FBT lowers the overall packaging cost and increases the employee’s disposable income.
     
    For eligible electric vehicles, your lease can be FBT free, but the vehicle lease is still a reportable fringe benefit.
     
    Check out our novated leasing calculator now to see how much you could potentially save.
    6. What happens if I leave my employer?

    If your employment ceases for any reason, you can choose from the following:

    • Option 1 – Continue the lease by paying monthly payments directly to LeasePlan
    • Option 2 – Offer to purchase the car for the Early Termination Price
    • Option 3 – Transfer the novated lease to your new employer 
    • Option 4 – Ask LeasePlan to help you sell the car through our auction partner
    7. Is my employer eligible?

    Businesses need to be trading for a minimum period of 24 months and have a current Australian Business Number (ABN) to work with LeasePlan. There is also a credit application that needs to be approved before we are able to do business.

    You will need your employer to agree to work with LeasePlan before you can get a novated lease. Get in touch with the LeasePlan team to get started.

    8. What else can I salary package?
    Apart from a car, a range of items can be salary packaged depending on your employer’s policy. Packaging allows you to pay for these items from your salary before tax, lowering your taxable salary and leaving more money in your pocket. Learn more about salary packaging here.
    9. How does the Electric Car Discount Bill help me save more on a novated lease?

    The Treasury Laws Amendment (Electric Car Discount) Bill 2022 passed both Houses of Parliament on 28 November 2022. It provides FBT exemptions on eligible electric (EV) and plug-in-hybrid vehicles (PHEV), as one of the Federal Government’s measures to reduce Australia’s carbon emissions by accelerating the take-up of electric cars. Learn more about the FBT exemptions on Electric Vehicles here.

    • The exemption applies to zero or low emission vehicles valued below the luxury car tax threshold for fuel efficient cars (currently $84,916)
    • This includes battery electric vehicles, hydrogen fuel cell vehicles, and plug-in hybrid electric vehicles (PHEV)
    • It does not apply to vehicles designed to carry 1 tonne or more, or 9 passengers or more
    • While FBT-exempt, the discount amount is still a reportable fringe benefit for tax purposes
    • Exemptions for PHEVs will be phased out from 1 April 2025