Understanding the Tax Side of Novated Leasing
Thinking about a novated lease and wondering how it affects your tax? You're not alone. One of the most common questions we get is: "Is a novated lease a reportable fringe benefit?" Let’s unpack it—along with what it means for FBT, GST and stamp duty.
Is a Novated Lease a Reportable Fringe Benefit?
The answer depends on the vehicle you finance under your novated lease. A novated lease is generally not considered a reportable fringe benefit on your income statement if your novated lease vehicle is a petrol, hybrid or now a PHEV powered vehicle. However, if your lease is for an EV, then yes, the FBT exempt benefit you receive is a reportable fringe benefit.
Translation, please? Depending on the vehicle you lease determines if it is a reportable fringe benefit.
Do You Pay FBT on a Novated Lease?
Technically, yes. A novated lease is a fringe benefit, so FBT applies. But here’s the catch: if the Employee Contribution Method is used correctly, your employer’s FBT liability can be reduced to zero.
That’s why Fleetcare structures most novated leases with post-tax employee contributions. It keeps things compliant while helping you avoid extra tax headaches. And if you're driving an eligible electric car, even better—thanks to the Electric Car Discount, many EV novated leases are completely exempt from FBT.
Do You Pay GST on a Novated Lease?
This one’s simple. With a novated lease, you don’t pay GST on the purchase price of the car, below determined thresholds That’s because the finance company claims the maximum GST input tax credit when financing your vehicle. You do have to pay GST on the residual value but this amount is considerably less that what would have normally being paid when purchasing the vehicle.
Most running cost expenses like fuel or charging, insurance, registration and maintenance are also charged to your novated lease account ex GST.
There’s another perk too: things like maintenance, insurance and servicing are all paid for using a combination of your before-tax and after-tax income, giving you further savings.
Do You Pay Stamp Duty on a Novated Lease?
You pay state-based stamp duties on the purchase price of your vehicle—but the good news is, it’s included in your lease package. When you get a quote from Fleetcare, stamp duty is already factored in. No nasty surprises.
The amount of stamp duty varies by state or territory and depends on the value and type of the car. With EVs and hybrids, you may also be eligible for reduced stamp duty in some states. We’ll always break this down for you when preparing your lease.
The Wrap-Up
A novated lease can feel a bit technical at first—but when you break it down, the tax side is surprisingly straightforward:
- Can be reportable as a fringe benefit (car-dependant)
- No FBT if you’re using ECM or driving an eligible EV
- No GST on the car’s purchase price and running costs
- Stamp duty is included in your lease quote (and possibly reduced for EVs)
Got questions about how it works for your situation? Our team can walk you through it—tax talk and all.
Explore our novated leasing showroom options today.
📞 Phone: 134 333
📧 Email: info@fleetcare.com.au