Novated Leasing a New Car
If you're thinking about buying a new car, novated leasing could save you 10-50% on your car and running costs.
From tax savings to our Clear Lease bulk-buy discounts, here’s how leasing a new vehicle through your salary can be the smartest way to drive.
New Car Novated Leasing Benefits
Full Tax Benefits.
Fleet Discounts.
No Compromise.
New cars are by far the most common choice for our drivers at Clear Lease, although it also works for Used Cars, and can even work on your current car.
From major fleet discounts, to massive tax benefits, here’s why it could be the right option for you:
GST-Free on Purchase & Running Costs
That’s a 10% saving right from the start, and it extends to fuel, servicing, insurance, and more.
Access to Major Buyer Fleet Discounts
In many cases, you'll get instant access to dealership-level fleet pricing (the highest possible discount) without any of the negotiation hassle.
No Upfront Costs, More Valuable than Buying Outright
In almost all cases, our drivers will get a 10-50% discount on car costs compared to a traditional loan (including the buyout of the car at the end).
All-Inclusive Budgeting Set from the Start
The pricing will follow manufacturer recommended guidelines and timelines for repair & maintenance, so you don't have anymore nasty surprises or forgotten bills.
How a Novated Lease Works:
Novated Leasing is a form of salary packaging, where your employer agrees to turn part of your pay in to a benefit, like a car. With a regular loan and paying for your own running costs, you are using after-tax wages, but with novated leasing, your employers pays for all of this with your pre-tax dollars, boosting your take-home pay without changing your salary.
Without a Novated Lease:
With Clear Lease:
The Process: novated leasing a New Car
Three Steps to Savings
1. Pick the Car.
To squeeze the most value out of Novated Leasing, the new car should be under the Luxury Car Tax threshold ($91,387 for EV's, $80,567 for Fuel Cars).
2. Get a Quote.
Once you've left us your details, our team members will reach out to make sure the car is fit for a novated lease, meeting all criteria, find the best finance rate, and prepare a lease proposal for you.
3. Sign the Lease.
From start to finish this can all happen as quickly as 1-2 business days.
Fringe Benefits Tax in a Nutshell: How it Impacts New Car Novated Leasing
Why EV's are the most common choice for new Car Novated Leases
FBT is a special tax applied to employee 'fringe benefits'. Fringe benefits are any forms of compensation, like health insurance, or novated leasing, that aren't directly salary/wages.
Fringe benefits tax is reduced when the employee has to pay post-tax to access their benefit, so with Novated leases, roughly 50% of the cost is paid pre-tax, and 50% is paid post-tax, to avoid FBT.
However, EV's are completely exempt from FBT, and if you novate a new EV, you can pay for all of the finance and ongoing costs with pre-tax money. This gives them a much stronger discount.
An FBT Example:
EV's vs ICE Cars & Savings
However, the Polestar 2 would actually cost a little less than the Mazda CX-5 on a Novated Lease, because it can be paid entirely with pre-tax dollars.
Meaning you can get alot more car, or alot lower cost by choosing an EV with a novated lease.
Polestar 2
Salary: $120,000. Which means you would normally pay $562 in tax per week.
Tax Savings: As an EV, 100% of Finance and running costs ($368) are deducted from your pre-tax salary, this lowers your weekly tax by $107, and GST by $33.
Mazda CX-5 Sport
Salary: $120,000. Which means you would normally pay $562 in tax per week.
Tax Savings: As it is not an EV, only 50% of the total finance and running costs ($287) are deducted from pre-tax salary, and 50% are taken post-tax. This lowers your weekly tax by $46, and GST by $13.
Frequently Asked Questions:
Almost any new car can be salary packaged under a Novated Lease.
There are a few caveats to be aware of though:
- It needs to legally be a 'car' for GST purposes. The ATO defines a car as a motor vehicle that is not a motorcycle (or similar). It also must be designed to carry less than one tonne, and fewer than nine passengers. Vehicles like motorcycles, tractors and earthmoving equipment cannot be novated.
- It makes a lot more sense to novate a new EV, given the extremely beneficial tax incentives (being exempt from FBT).
- Cars that are over the luxury car charge threshold ($91,387 for EV's, $80,567 for Fuel Cars) will incur additional tax that can dramatically reduce the potential value in novated leasing.
If you change jobs, your lease can be transferred to your new employer, or you can choose to take over the payments yourself. Our team will help you manage the transition so you stay covered.
It's entirely up to you whether you want to own the car or not - and you don't need to decide until the final months of the lease, whether you want to keep it, upgrade, or move on.
While the lease is active, the finance company technically owns the vehicle (which is how you get the tax benefits).
You choose the car and drive it as your own, but it’s leased under a three-way agreement between you, your employer, and the leasing provider.
At the end of the lease, you have options:
- Pay the residual amount to buy the car outright
- Refinance the residual and keep the car
- Upgrade to a new car and start a fresh lease
As with any novated lease, you will have three options when your lease comes to an end:
- You want to buy and keep the car, and you want to pay the lump sum residual fee to do so (you'll know what this fee is before you sign to begin the lease). You pay the fee, and have no more lease payments - just regular ownership of the car.
- You want to buy and keep the car, but don't want to pay the full residual sum all at once, so you refinance the residual under a new novated lease, keeping the tax benefits while paying to own the car.
- You don't want to keep the car, so you sell it and use sale price to pay the residual fee. From here you can choose to start a novated lease on a new vehicle if you wish.
Clear Lease can have you fully settled and financed within a day or two from contact. The main barrier is ensuring that we already work with, or can contact your employer to ensure they are onboard with salary packaging.
We already work in the background with thousands of Australian employers, and can often get it setup at your organisation quickly, when you request a quote with us, we'll check if we can work with your employer.
Novated leasing with us includes maintenance and repairs as part of the price by default, unless you request otherwise.
We'll dive into Manufacturer guidelines for repairs expected at certain intervals depending on the model you're looking at, and pre-plan for these repairs coming up, as part of the fixed cost you'll pay per pay cycle. This helps you to not worry about unexpected costs coming up.
Over time we've liaised with the major car providers and facilitated purchases many times. Our long-term relationships with dealerships and manufacturers and power as a major buyer in Australia means we can negotiate fleet pricing discounts that retail customers wouldn't be able to get approval on.
For many people, yes. If you're salaried, want to put your tax to better use, and would otherwise have a car, novated leasing can save you money. There’s no upfront deposit, meaning that cash can be used elsewhere or invested - no GST on the purchase, and you benefit from tax savings on repayments and running costs. Plus, budgeting is simpler with one all-inclusive, pre-tax payment.
That being said, novated leasing isn’t a great reason to buy a more expensive car than you need. It’s a smarter way to pay for a car you were already planning to get, or get a nicer car for the same price - not a green light to splurge on something you can't really afford.