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Novated Lease Australia: Drive a New Car and Pay Less Tax

Looking to upgrade your car without trashing your take-home pay? We will help you bundle all your vehicle costs into your salary, using pre-tax dollars to slash your taxable income.
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Updated on 27 April 2026
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A novated lease is one of our most popular car financing options. We combine convenience with tax efficiency, allowing you to bundle car expenses into one simple payment through salary packaging.

What is a Novated Lease and How Does it Work?

Think of a novated lease as a salary packaging arrangement where your employer handles your car payments using a mix of your pre-tax and post-tax income. Currently, electric vehicles represent 35% to 40% of all new novated leases, nearly quadruple the national sales average for all cars.
  • The Three-way Agreement:

This is not your typical loan; it’s a legal ‘novation’ where your employer steps in to facilitate payments to the lender, while you retain full use of the car for work and play.

  • Pre-tax and Post-tax Contributions:

To ensure you get the best result at tax time, payments are structured to reduce your taxable income while also managing Fringe Benefits Tax (FBT) through the Employee Contribution Method.

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Types of Novated Lease Options Available

There is not just one way to structure a deal. Our calculator helps you compare different leasing styles so you can see which one fits your budget and lifestyle best.

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Fully Maintained Novated Lease:

The ‘set and forget’ option, where fuel, servicing, insurance, and even new tyres are all covered by one simple, transparent payment.

Non-maintained (Self-managed) Novated Lease:

Great for those who want the tax breaks on the finance itself but prefer to shop around for their own mechanics and insurance providers.

Novated Lease for Used Cars:

You do not need a showroom-fresh car to save; you can package a reliable second-hand vehicle or even ‘sell’ your current car to the lender and lease it back.

Sale and Leaseback (Existing Car):

We show you how selling your current car to a financier and leasing it back can unlock equity while saving you money on daily costs.

Electric Vehicle (EV) FBT-Exempt Lease:

Check our latest estimates for zero-emission cars to see how the FBT exemption can maximise your salary compared to a standard car.

Novated Finance Lease:

A common structure where you manage the vehicle’s residual value risk at the end of the term while benefiting from salary-packaged finance repayments.

Novated Operating Lease:

The provider assumes the risk of the car’s future value, letting you drive the vehicle for a set period and simply return it when the lease ends.

Key Benefits of a Novated Lease

We have built our platform to help you uncover the strategic tax advantages that often go unnoticed. By running your numbers through our calculator, you can see exactly where the savings come from.

  • GST Savings: Calculate how much you will save by not paying GST on the car’s purchase price or its ongoing maintenance.
  • Reduced Taxable Income: See the difference in your annual tax bill when your car costs are taken out before your income is taxed.
  • Fleet Discount Pricing: We highlight the impact of accessing ‘fleet’ pricing for your vehicle and parts, which usually isn’t available to private buyers.
  • Convenient Budgeting: Our breakdown shows you how smoothing out your registration and insurance into predictable deductions removes the stress of big annual bills.
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How to Apply for a Novated Lease

We provide the clarity you need to get started. If your employer offers salary packaging, follow our guide to see if you meet the requirements.

Eligibility Criteria for Novated Leasing:

While most working Aussies can access these benefits, use our checklist to ensure you are ready:
  • You need to be a permanent employee (either full-time or part-time)
  • Your employer must be willing to sign the novation agreement and handle the payroll deductions
  • You will need to pass a standard credit check, just like any other type of finance
  • The vehicle must be a car. Heavy, commercial trucks or vehicles with a massive payload usually would not qualify

The 5-Step Application Process:

We have ditched the complicated paperwork and cleared the hurdles so you can get behind the wheel faster and without the usual headaches.

Run the Numbers

Use our calculator to see exactly how much your take-home pay will change.

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Talk to Your Employer

Get the green light from your payroll or HR department to ensure they support novated leasing.

Secure Approval

We will help you submit your financial details to get the finance approved quickly.

Find Your Ride

Pick the car you want - new or used, and we will use our buying power to hunt down a better price.

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Sign and Drive

Once the paperwork is sorted, the car is yours, and the tax savings begin immediately.

Novated Lease vs Car Loan – Key Differences Explained

Choosing between these two depends on whether you prefer the simplicity of a loan or the massive tax efficiency of a lease.
Feature Novated Lease Traditional Car Loan
Repayment Source
Pre-tax & Post-tax Salary
After-tax Income
GST Savings
10% off price & running costs
No GST savings
Fringe Benefits Tax
Yes (often exempt for EVs)
No
Ownership
Residual payment at the end
You own it immediately
Maintenance
All-inclusive bundled payment
Paid out of pocket

Novated Lease: Common Questions & Expert Answers

Get clear, straightforward answers on how salary packaging works and how it can help you save more every payday.
If you switch employers, the lease is ‘de-novated’ and becomes a standard finance lease. However, most of the leases we manage are portable; if your new employer offers salary packaging, they can simply take over the agreement so you keep your car and the tax benefits.
Absolutely. You do not have to buy brand new to save. You can lease a high-quality used car from a dealer, or even perform a ‘sale and leaseback’ on the car you currently own to unlock its equity and start paying for its running costs with pre-tax dollars.
The residual value is a final lump sum set by the ATO based on the length of your lease (e.g., about 28% for a 5-year term). Because you have not paid off the full value of the car during the lease, this payment is required at the end if you want to own the vehicle outright or trade it in.
Yes. Years ago, tax breaks were tied to high mileage, but those rules have changed. Today, the benefits are based on your salary and the car’s value, meaning you save the same amount on tax and GST whether you drive 5,000km or 50,000km a year.
This is the biggest ‘cheat code’ in Australian finance right now. We have seen eligible EVs and Plug-in Hybrids save our clients thousands of extra dollars every year compared to petrol or diesel leases due to the Fringe Benefits Tax exemption.
You can request a payout figure at any time to end the lease early. However, because these agreements are structured for specific tax timeframes, early exits may involve fees or a payout amount that is higher than the car’s current market value.

Not sure if a novated lease will actually save you money on your next car?

Learn how salary packaging can reduce your tax and simplify car ownership.
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