A Novated Lease is a Finance Lease between the financier and the employee which is then novated to the employer. The employee chooses the car they want and the employer pays the employee's rental obligations from the employee's pre-tax salary.
If the employee leaves their employer, the employee keeps the car including the rental obligations or arranges for their new employer to take over the lease.
Benefits to Business
- No risk of being left with unwanted company cars - if the employee leaves they take the car and the rental obligations with them.
- Tax benefits - tax benefits may apply for the employer's business.
Benefits to Employee
- Increase effective value of salary package - lease payments come from pre-tax salary.
- Unlimited private use of the car - the employee has effective control of the car at all times.
- Flexibility - complete choice of car and where to purchase it.
- Never left without a car - retain the car even when changing jobs.
- No need to budget - The employer will make the repayments on behalf of the employee, removing the need to budget for payments.
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