Novated Lease

A novated lease is an arrangement where an employee leases a car through a finance company, and their employer agrees to take on the lease payments from their salary. This is typically done via a salary packaging agreement, where the employee sacrifices part of their pre-tax income to pay for the vehicle. This can reduce taxable income and provide tax benefits. The employee remains responsible for the vehicle’s ongoing costs, such as maintenance and insurance, but the employer handles the lease payments. At the end of the lease, the employee may have options to buy, extend, or return the vehicle.