The novated lease is a three way agreement between employer, employee and finance company.  The employee leases a car of his or her choice from the finance company, then novates or transfers the underlying lease obligation to the employer for as long as the employee remains with that employer – lease payments and running costs are met through a salary packaging arrangement.

The employee is able to access their car of choice and take a tax advantage through salary sacrifice, while the employer generally is entitled to use concessional valuation rules for fringe benefits tax purposes. Although the vehicle is privately owned by the employee it is treated as if it were a company car.

*A novated lease precludes you from claiming motor vehicle expenses.


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