Purchase your next vehicle with our expert car finance services
What is a Novated Lease?
Novated Car Finance Options
A novated lease is a tax-effective option that lets you bundle
your car payments and running costs into one monthly payment that your
employer pays for using a combination of you pre and past-tax salary.
How does novated lease work?
If you have the option of receiving a car as part of your salary package, a novated lease allows you to enjoy significant tax savings because payments associated with your vehicle are paid from your pre-tax salary.
With an Auto Car Finance novated lease, we’ll source and purchase the car of your choice. Your employer will deduct the cost of the lease and your vehicle’s running costs (fuel, servicing, tyres, etc.) from your salary, and you’ll enjoy hassle-free driving in your new car.
Compared with other types of car finance, a novated lease gives you the convenience of having all your car costs packaged into one simple payment and access to fleet discounts on fuel and servicing – along with great tax benefits.
All your car costs covered in one monthly payment
At Auto Car Finance, we’ll set you up so that your novated lease payments cover your car’s expenses during your lease term. Your monthly payments will include the costs of:
Novated Leasing Explained
A novated lease is a three-way agreement between you, your employer and Auto Car Finance. Under this agreement, you enter into a finance lease with Auto Car Finance; then a novation agreement is used to transfer some of the obligations of the lease to your employer.
Once a novation agreement is in place, your employer – not you – is considered to be the leasee of your car. This means that your vehicle can be treated as a company car which gives you access to significant income tax and GST savings.
With a novated lease, your employer will deduct an agreed amount from your salary regularly and transfer these funds to Auto Car Finance to pay for your lease and your vehicle’s running costs. We’ll monitor your car expenses and provide regular reporting throughout the life of your lease to ensure you’re tracking in line with your budget.
A novated lease is a tax-effective way to finance your car and have your employer pay for it using a combination of your pre and post-tax salary. Speak to your employer to see if you might be eligible for a novated lease within their salary packaging policy.
Auto Car Finance makes novated leasing easy
Arrange an Auto Car Finance novated lease for your car in four simple steps:
- Call us on 1300 547 226
Need help to understand if a novated lease is right for you? We can explain how they work, how a novated lease can help you minimise your tax, and how to get started.
- Choose the car you’d like to finance
An Auto Car Finance novated lease allows you to finance a new or used car – you can even choose to finance your existing car. We can organise test drives and negotiate on your behalf to achieve a better price for your new car and a higher value for your trade-in.
- Approve your quote
Once you’ve chosen the car you’d like to finance and decided on any extras, we’ll provide you with a quote that includes all costs associated with financing and running your vehicle over the life of your lease. When you’ve approved this, we’ll look after the paperwork and get you into your new car fast.
- Leave the rest to us
We’ll order your car and organise for delivery as soon as your finance is approved. You’ll receive an Auto Car Finance fuel card and have peace of mind that we’re managing all vehicle expenses on your behalf.
Save on income tax
With a novated lease, your car repayments and running costs are paid for using a combination of your pre and post-tax salary. This approach reduces your taxable income and allows you to enjoy significant tax savings.
Save on GST
Because Auto Car Finance purchases your car on your behalf, GST is excluded from the sale price when you buy with a novated lease. You’ll also save on GST for all running costs including fuel, servicing and tyres.
Access better pricing
Our car buying service provides you with competitive pricing on the new or used car of your choice – any make, any model – Australia-wide.
Enjoy peace of mind
Auto Car Finance’s repair assist program takes the hassle out of scheduled servicing, maintenance and repairs. Our repair specialists offer fleet discounts on parts and labour, and we check every job to ensure you’re not overcharged.
Save on fuel
Choose from a Shell or Caltex fuel card, allowing you to pay for fuel at more than 90% of suppliers across Australia. Or, you can save your receipts and get us to reimburse you.
Stay on budget
We’ll help you to budget for the cost of your car’s finance and running expenses throughout the life of your lease and monitor your costs to ensure you’re tracking in line with this budget.
One of the great benefits of novated leasing is that it lets you enjoy GST-free motoring. With a novated lease, you’ll save on GST in two ways:
- Save on the purchase price of your carGST is excluded from the sale price when you buy with a novated lease because Auto Car Finance purchases your car on your behalf. By paying no GST you can save thousands of dollars when you buy your new car.
If you choose not to use Auto Car Finance’s car buying service, we recommend you buy your new car through a registered car dealer rather than a private seller. A registered dealer can issue us with a tax invoice, allowing us to claim back GST on your behalf; this option isn’t available with a private sale.
- Save on the running costs of your carDepending on your employer’s salary packaging policy, they may be able to claim back the GST portion of your vehicle’s lease repayments and running costs, saving you 10%.
What is FBT
What is FBT (fringe benefits tax)?
Fringe benefits tax (FBT) is paid by your employer on certain benefits they provide you with, including allowing you to use a work car for private purposes.
When you finance a vehicle with a novated lease, your employer will use your pre-tax salary to pay for a portion of your novated lease, effectively reducing your taxable income. To offset this, the ATO levies FBT on the benefits you’ve received as a result of your novated lease.
How is FBT calculated?
The annual FBT charge on a novated lease is generally calculated by multiplying the cost of the car (including GST) by a 20% flat rate determined by the ATO.
Though you’ll be liable to pay FBT at tax time, a novated lease is usually still taxed effective because in most cases, your income tax savings will be greater than the FBT payable.
At Auto Car Finance, we use the employee contribution method (ECM) to reduce the amount of FBT you’re charged. With the ECM, any post-tax contributions that you make towards the running costs of your vehicle reduce your payable FBT. And, if you use your vehicle for business more than 50% of the time, we’ll use the operating cost method to calculate the FBT owing, providing you with even more savings.
What is ECM
What is the ECM (employee contribution method)?
The employee contribution method (ECM) allows you to reduce your FBT (fringe benefits tax) liability by making post-tax contributions towards the running costs of your car. At Auto Car Finance, we automatically split your novated lease costs into pre and post-tax contributions to maximise the tax benefit you receive.
How does ECM work?
The most tax-effective way to use ECM is to pay enough of your car running costs in post-tax dollars, removing the need to pay any FBT. The post-tax amount required to eliminate your FBT liability is generally 20% of the GST-inclusive price of your vehicle each year.
Contact Auto Car Finance on 1300 547 226 for more information about ECM, including how it’s calculated and how it may benefit you.
Transferring Novated Leases (Mid-Lease Transfer)
At Auto Car Finance, we’re committed to delivering the best outcome for our customers. Because novated leases typically run from one to five years, there’s a reasonable chance you may change employers during your novated lease period.
Our approach to mid-lease transfers reflects our commitment to providing industry-leading customer service and a hassle-free experience for you. It’s easy to move your novated lease to Auto Car Finance – we operate with your best interests at heart and, importantly, we don’t work on commission.
Many novated leasing companies will encourage you to refinance your lease if you change novated lease supplier due to a change in employment. This usually delivers few – if any – customer benefits; rather, it’s a somewhat sneaky way for your new novated leasing provider to receive a commission from the new finance provider.
At Auto Car Finance, we don’t work that way. We’ll set up a new salary packaging and fleet management arrangement for your existing lease, meaning there’s no need to refinance anything. By taking this approach, we do our best to ensure that your payout figure or residual value is approximately the same as the market value of your vehicle when it’s time to upgrade.
Contact us for more information about how we can make your mid-lease transfer straightforward and pain-free.
At Auto Car Finance, we provide proactive, personal service throughout the life of your novated lease – not just until your finance has settled. Fleet management is an important part of our business, and we’re driven to deliver a hands-on approach that sets us apart from our competitors.
Our experienced team work hard to make your vehicle ownership experience rewarding and hassle-free. We take care of the following aspects – and more – for our novated lease drivers:
- Lease payments
- Roadside assistance
Fleet management benefits
With Auto Car Finance, owning a car is easy. We’ll collect money directly from your employer and use these funds to pay for the running costs of your vehicle on your behalf. We’re responsive, customer-focused and transparent – which means you’ll always know where things are at when it comes to your novated lease.
Our online portal allows you to access detailed reporting 24/7 from any device. Check your account balance, submit a claim and run a transaction report to see your spend on fuel, insurance and more.
Our fuel cards allow you to enjoy discounted fuel at more than 90% of Australian petrol stations.
Fringe benefits tax (FBT) management
We’ll proactively collect data to make it easy for you to meet your FBT reporting obligations with confidence.
We’ll help you to budget for the cost of your car’s finance and running expenses throughout the life of your lease, and monitor your costs to ensure you’re tracking in line with this budget.
Industry-leading customer service
We’re serious about customer service. We’re proud to maintain a 5-star Google rating, and two-thirds of our business is via referrals from satisfied clients.
Professional, honest advice with your best interests at heart
We don’t work based on commission – at Auto Car Finance, we’re here to source and structure the best deal for you. We provide independent expert advice that’s tailored to your individual needs.
Contact us for more information about making your motoring easy with an Auto Car Finance novated lease.
Frequently Ask Questions
Our frequently asked questions.
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