What happens to my novated lease if I change jobs or am made redundant?
Your novated lease is tied to your employer for tax benefits, but it doesn’t have to end if you leave or are made redundant. Here's what happens and your options.
Changing jobs? Made Redundant? Here's what it means for your novated lease
Since a novated lease is a three-way agreement between you, your employer, and the lease provider, changing jobs affects the structure, but not necessarily the lease itself.
1. The lease doesn’t automatically end
Your lease is in your name, not your employers. That means you're still responsible for the car and repayments, even if you leave your job.
2. Your options when changing jobs:
- Transfer the lease to your new employer
If your new employer allows novated leasing (and most do, or will as part of your offer if they know you have one), your lease can usually be transferred with a little paperwork. Once transferred, your payments will be salary packaged again.
- Take over the lease privately (as a finance lease)
If your new employer refuses to offer novated leasing, you can continue making the lease payments out of pocket (post-tax) until the lease ends. You won’t get the tax benefits, but you can keep the car.
- Payout or terminate the lease early
You can always choose to pay out the lease, refinance it, or sell the vehicle. Just note that early termination fees may apply.
3. Keep your lease provider in the loop
The sooner you tell us you’re changing jobs, the smoother the process. The more notice we have, the more we can help pause deductions, arrange private payments, and coordinate with your new employer if needed.
Related Information:
The Luxury Car Charge is a salary deduction used to offset the extra tax your employer pays when you lease a car above the ATO’s luxury car depreciation limit. It helps them recover the shortfall from reduced tax deductions.
Please note, this is completely separate from the Luxury Car Tax (LCT).
FBT is a tax (with a rate at 47%) applied to fringe benefits (incentives beyond salary/wages received from an employer). A non-electric car under a novated lease is a fringe benefit (electric cars are completely FBT exempt in Australia).
The employer is responsible for paying the FBT, but at Clear Lease - we use the employee contribution method (contributing post-tax funds) to offset any FBT to zero.
Our regular novated lease package (fully-maintained) usually includes your car lease repayments, fuel/charging, servicing, maintenance & repairs, registration, insurance, and tyres - all bundled into a single pre-tax deduction.
Yes, but it’s treated as a financial termination. You'll need to pay out the remaining lease value (and any fees), and you may lose some tax benefits. Talk to us to get a payout quote from your financier.
No, when your employer leases the car, they claim the GST credit, meaning you don’t pay GST on the purchase price. The same applies to most running costs. You will, however, pay GST if you buy the car at lease end.
Yes, if you’d like to keep the car, you simply pay the residual value set at the beginning of the lease. You can pay this from your personal funds, or refinance it separately. Once paid, the car is yours. You can also sell or trade it in and start a new lease.
Yes, if your new employer supports novated leasing, you can transfer your lease by signing a new agreement. If they don’t, you’ll need to make private repayments, refinance, or consider ending the lease.
Cars that are too old, unroadworthy, imported, heavily modified, or intended for commercial use typically don’t qualify for novated leasing. Motorcycles are also excluded under current ATO guidelines.
Luxury Car Tax (LCT) applies to vehicles that exceed the government’s set price thresholds. For the 2024–25 year, it’s $76,950 for standard vehicles and $89,332 for fuel-efficient ones. If your lease includes a car above these values, LCT may be added to your lease costs.
Please note: This is very different to the Luxury Car Charge (LCC).