Novated Lease
Enjoy tax savings and discounts on your car loan.
Novated leasing is a type of vehicle financing arrangement commonly used in Australia.
A novated lease is a finance arrangement used with salary packaging. It simply means that your employer pays for your car lease and car running costs out of your salary package through a combination of pre-tax and post-tax salary deductions.
The employee and the employer also enter into a novation agreement, which allows the employer to take on the obligations of the lease. The employer agrees to make lease payments on behalf of the employee using funds deducted from the employee’s pre-tax salary.
Novated leases offer several benefits to employees, including potential tax savings, convenience, and access to fleet discounts on vehicle purchases. However, it’s important to consider the terms and conditions of the lease, including any potential costs or penalties for early termination or changes in employment.
Force Financial Solutions can guide you through your options.
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Self Employed
When you are self-employed, you can still participate in a novated lease arrangement, but the process and considerations may be slightly different compared to being an employee of a company.
Since you don’t have a regular salary, you will likely be required to provide additional documentation to verify your income as a self-employed individual. This may include tax returns, financial statements, bank statements, or other evidence of consistent income.
Self-employed individuals may have different tax implications compared to traditional employees. If you plan to use the leased vehicle for business purposes, you may be eligible to claim a portion of the lease payments and associated costs as business expenses.
Have a car and want to make the switch?
Salary packaging your current car (converting it to a novated lease) is also known as “sale and leaseback”.
By selling the car and leasing it back, you can generate immediate cash without giving up the use of the vehicle. Lease payments are typically fixed and predictable, making it easier to budget and manage expenses.
