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I am... an employee

looking to save money on buying and running my next car.

What is a novated lease?

A novated lease is a hassle-free vehicle leasing solution that saves you money on everything from vehicle finance, to fuel, maintenance, and roadside assistance.
It’s a salary sacrifice arrangement, which means your vehicle and associated running costs are bundled into a single payment, which is deducted from your pre-tax salary. You'll enjoy great fleet discounts, GST savings and a reduced taxable income, along with the convenience of a single payment for all vehicle expenses.

How does it work?

A novated lease is a salary sacrificing option that lets you pay for a new or used car of your choice from your pre-tax salary. It’s an agreement between you, your employer and a novated leasing company, like Fleetcare.
Once you choose your car, Fleetcare arrange the best price for you through our range of dealer networks. You complete a finance application and Fleetcare arrange a lease agreement with your employer for the vehicle. Your employer then deducts the cost of the lease from your pre-tax salary.
How will novated leasing save me money?

  • Pay less tax by paying for your new car and related expenses from your pre-tax income.
  • You’ll receive fleet discount pricing on the vehicle cost and ongoing expenses.
  • 10c off every litre of fuel, every time – with your Fleetcare BP fuel card.
  • You pay no GST on the purchase price, or ongoing expenses like fuel and servicing – that’s a 10% saving right there!
  • Smooth your expenses and never have to worry about finding the money for new tyres again - it’s all included in your fortnightly or monthly payment!

Frequently Asked Questions

Q. How do I know if I’m eligible for a novated lease?

If you’ve completed your probation period at work and your employer is happy to enter into the agreement with us, you’re eligible.

Q. Can I only take out a novated lease agreement through my employer?

Yes. It’s a salary sacrifice arrangement, so your employer must be involved.

Q. Do I have to buy a new vehicle to enter into a novated lease agreement?

No. As long as your vehicle is less than 8 years old by the end of the lease, we're happy for you to choose a second hand vehicle. You can even novate your existing vehicle.

Q. I have a trade-in vehicle. Can it come off the purchase price?

With Fleetcare, you can trade-in a vehicle as part of the process for your Novated Lease, however the trade-in funds cannot be used to reduce the lease principle.

Q. Can I choose the insurance company? I might be able to get a better deal elsewhere.

Yes. We always try to find a competitive insurance quote on your behalf, but it is possible to source your own insurance. Just bear in mind that standard car insurance may not provide you the same level of cover like Guaranteed Asset Protection or Lease protection Insurance. If you're not sure about your insurance options, just speak with one of our friendly consultants. 

Q. Can I set my vehicle residual lower than recommended?

The vehicle residual must sit within the minimum and maximum in term of the Australian Tax Office guidelines.

Lease Term Years Min Residual % Max Residual %
1 60 66
2 50 57
3 45 50
4 35 45
5 25 35
Q. What happens at the end of my novated lease?

When you come to the end of your lease, you have three options:

  1. Easily upgrade your car and start a new lease by trading your vehicle back to Fleetcare.
  2. Purchase the vehicle outright by paying off the residual value.
  3. Extend the lease and refinance the residual value.
Q. How does Fringe Benefits Tax (FBT) work?

Motor vehicle Fringe Benefits Tax (FBT) applies where a vehicle is supplied by an employer to an employee or their associate, and is available for private use.

As the employer provides the fringe benefit, they are liable for the FBT payable, however under salary sacrifice arrangements, where the employer should be no worse off than if they had offered remuneration in the form of straight salary, the employer generally charges the FBT payable to the employee’s salary package post-tax.

You can also make post-tax, GST inclusive employee contributions which reduce the taxable value and in some cases, can result in no FBT being payable at the end of the FBT year. The taxable value of the fringe benefit is calculated using either the statutory fraction or operating method.

Fleetcare's FBT service provides a calculation under each method and identifies the most cost effective method. You should always consult with a tax professional to ensure the best outcome for your personal circumstances.

Q. How much can I save on a novated lease compared to a car loan?

To see how much money you could save with a Fleetcare Novated Lease, check out our Novated Lease calculator.

Think a Novated Lease is right for you?

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Disclaimer: Income Tax savings are dependent on your taxable income and individual tax status. GST savings take into consideration your employers accounting methods and internal policies around GST, and passing on input tax credits.