A novated lease is a finance lease agreement between an individual (employee), his/her employer and a finance company. In this case, the employer makes monthly repayments on your behalf via a salary sacrifice program or car allowance.
Benefits for the employee:
- Flexibility with the choice of vehicle to meet your business and personal needs
- You can take the vehicle with you when you change jobs
- Tax benefits as financing may be paid with pre-tax dollars (remembering there may be Fringe Benefits Tax to consider)
Benefits for the employer include an easy way to add value to an employee’s remuneration package. The vehicle is the responsibility of the employee, so there are no costs to the employer associated with disposal of the vehicle should the employee leave.