7 Apr 2025
How Novated Leases could save you money
Are you looking for a smart, tax-effective way to finance a new car while saving on running costs? A novated lease could be the solution, offering fleet discounts, GST savings on the purchase price, and tax benefits that reduce your overall costs—helping you drive the car you want and potentially saving you money.
Novated Leases can be a game-changer for your budget. On top of streamlining all the tedious admin that comes with car ownership – managing rego, servicing insurance…the list goes on… a Novated Lease could leave you with more in your pocket each year. And not just a few dollars more. We’re talking potentially thousands more!
If you’re still on the fence, you can check out the pros and cons. But if you’re ready to consider a Novated Lease, here’s a run-down of how it works and how it could save you money.
Plus, we’ll show you how our handy Novated Lease calculator can help you estimate your savings in minutes.
How do Novated Leases work?
A Novated Lease is a three-way agreement between you, your employer and a finance company. The arrangement allows you to lease a car using some of your salary before income tax is deducted (and, in the case of eligible electric vehicles, all your costs can be paid with your pre-tax salary!). This means you can pay for your car using pre-tax salary and reduce the overall amount of tax you pay.
When you take out a Novated Lease, you’ll choose the car that suits your needs and your employer will set up a salary packaging arrangement. Your lease payments, along with budgeted running costs for things like registration, maintenance, insurance and fuel, are made directly from your salary – and in some cases, before income tax is deducted.
This arrangement simplifies and bundles your car costs into a predictable regular payment, saving you time, money and admin hassles.
6 ways Novated Leases could save you money
1. Reduce your taxable income
A Novated Lease allows you to make lease payments using a portion of pre-tax income, reducing your taxable earnings. This setup not only lowers your income tax but could make getting and running the car you WANT more affordable.
2. Reduce the GST you pay
A great perk of a Novated Lease is the opportunity to save on GST. You could save up to $6,334 (as per ATO guidelines, current at 01.07.2024) in GST on the purchase price of the car.
But the savings don’t stop there. Throughout the lease, you could continue to save on GST on running costs like fuel, maintenance, registration and insurance.
3. Take advantage of fleet discounts
Novated Leases often come with access to fleet discounts on car purchases. At FleetPartners, we’ve built relationships with a national network of dealers and service providers. You can access this network to secure competitive prices on a range of cars and pre-negotiated rates on servicing and maintenance when you use our network.
4. Bundled running costs
Managing car expenses can be unpredictable. If you’ve ever had a tyre blowout or a major service creep up on you right when you’re feeling the pinch, you know what we’re talking about. But Novated Leases take a lot of the guesswork away by including budgets for running costs which are bundled into one monthly payment.
With our Novated Leases, your regular payments can include a budget for:
- Car finance
- Comprehensive insurance
- Scheduled servicing
- Replacement tyres
- Fuel and lubricants
- Re-registration
FleetPartners collects and holds this budget in your Novated Leasing account, so when servicing, repairs or a bill hits, we’ll pay it for you - directly from your Novated Lease account.
Your lease payments are set up to align with your pay cycle. FleetPartners and your employer’s payroll team take care of the administration and the entire process takes the stress out of running your car.
5. FBT exemption for electric vehicles
Considering upgrading to an electric vehicle (EV)? Novated Leases are even more appealing with EVs. Under the Federal Government’s Fringe Benefits Tax (FBT) exemption, eligible EVs below the luxury car tax threshold can score you significant savings.
The ATO requires employers to pay tax on all forms of compensation they provide to you – not just your salary. This includes benefits such as novated leases, which means your employer would have to pay FBT on the value of the benefit. Your leasing provider will work with you to manage any FBT you may be liable to pay on your novated lease.
However, eligible electric vehicles are exempt from payment of FBT (up to the luxury car tax threshold).
6. Flexibility at the end of the lease
Older cars can start to become expensive to maintain, as parts fail and need replacing. You can avoid rising maintenance costs at the end of your lease by upgrading to a new car (with a new Novated Lease) and continue to keep all your maintenance costs bundled into one payment on payday.
Want to read about your options in a bit more detail? This guide explains what happens at the end of a Novated Lease.
How to calculate your savings
Want to know how much you could save with a Novated Lease? We’ve created a Novated Lease Calculator to help you do just that. Whether you have your eye on a particular car or have a budget in mind, you can get an instant estimate of your potential savings*. Here’s how to use it:
- Select the Make, Model and Variant (or simply pop in a budget and vehicle type)
- Enter your pre-tax salary
- Review your potential savings instantly.
You can change the calculations based on how many kilometres you plan to drive each year, how long the lease term will be and whether you get paid weekly, fortnightly or monthly.
Want to give it a try? Calculate your potential savings.
Make your money go further with a Novated Lease
If you’ve got your eyes on a new car – either brand new or new to you – a Novated Lease is a great way to get into that car. By reducing your taxable income, avoiding some of the GST on both the new car purchase price and running costs (or ALL the running costs with eligible electric vehicles), and bundling all your expenses into one predictable payment, a Novated Lease could lead to some pretty significant savings.
If you’re ready to leave surprise bills and time consuming car admin behind, get in touch and ask us about a Novated Lease with FleetPartners.
Important note: This information is general in nature and does not constitute financial or tax advice and does not take into account specific financial circumstances, situations or needs. Independent financial and tax advice should be sought.
Disclaimer
* Savings estimates are based on a number of factors and assumptions. To view these factors and assumptions click here.
How Novated Leases could save you money