What is Novated Leasing?
A novated lease allows you to lease a car using pre-tax income. Your employer takes care of the lease payments, making it an affordable option that offers flexibility, tax benefits, and savings on car costs.
Most of our drivers get a 10-30% increase to take-home pay just by switching to a novated lease.
How a Novated Lease Works in Practice
Novated Leasing lets you pay for your car and running costs with pre-tax dollars
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. Your employers pays for all of this with your pre-tax dollars, boosting your take-home pay without changing your salary.
A percentage of your car expenses (fuel, maintenance, insurance) is deducted from your salary before tax. If you drive an EV, you can even pay 100% of your car costs pre-tax, making it an even bigger win.
Most of our drivers see a 10-30% increase in take-home pay just by salary packaging their car.
Without a Novated Lease:
With Clear Lease:
What's included in the lease & price?
Most of our drivers opt for a 'fully maintained' novated lease, we'll get to explaining that a bit further in this page, but generally a fully maintained lease means the price includes everything you and your car needs, with an all-in-one package. And with Clear Lease, that means one price with no hidden fees, and no surprises.
Novated Leasing vs a Loan vs Buying Outright
Novated leasing outsmarts even outright purchases.
The savings increase when the car is electric (as EV's are 'FBT Exempt', meaning 100% of the car costs are paid by your pre-tax dollars). If the car is not electric, only a portion of the car costs can be paid with pre-tax dollars and savings decrease.
Polestar 2
Assumptions:
Term: 5 year loan/lease/running costs
Salary: $120,000. Which means you would normally pay $562 in tax per week.
KM’s Driven/Year: 10,000km’s. Which means the Polestar 2 would cost you ~$93/week for running costs (Registration, Insurance, Charging, Maintenance & Repairs, etc)
Novated Lease Breakdown
Car Loan Breakdown
Buying Outright Breakdown
Mazda CX-5 Sport
Assumptions:
Term: 5 year loan/lease/running costs
Salary: $120,000. Which means you would normally pay $562 in tax per week.
KM’s Driven/Year: 10,000km’s. Which means the Mazda CX-5 Sport would cost you ~$108/week for running costs (Registration, Insurance, Fuel, Maintenance & Repairs, etc)
Novated Lease Breakdown
Car Loan Breakdown
Buying Outright Breakdown
Types of Novated Leases
Novated leases come in two main types: Fully-maintained and Self-managed. In our experience, Fully-maintained is by far the most common, but some opt for self-management.
1. Fully Maintained
It's by far the most popular option at Clear Lease, and 95% of our drivers opt for it.
Fully maintained with Clear Lease is usually the ideal choice (for most), thanks to its simplicity and convenience. It takes all of the tax learning, effort, documentation, and forward planning out of your hands and lets us take care of it.
With a Fully Maintained lease, you also pay one fixed cost each pay cycle for everything, and it even accounts for predicted repairs at regular intervals. Whether it's accessing our fleet pricing or special interest rates, it’s a hands-off option that frees you up to focus on just the best Novated benefits.
2. Self-Managed
Why would some people opt for self managed?
A lot of other Novated Leasing providers will force you to use their preferred financier who has a high interest rate, or say you cannot pick your own mechanics/service centres unless you go self-managed, which is why this method has gained some popularity.
At Clear Lease, we work with a range of lenders and let you choose your preferred providers if you wish. That's why almost all of our drivers just go fully-maintained.
If you’re the type of person who enjoys getting hands-on with every part of the process, and wants to do their own learning, this option might still be better for you. For most, it requires too much forward planning and effort.
Which Cars are Eligible for a Novated Lease?
New, Used, or your Own.
One of the biggest advantages of novated leasing is flexibility. Whether you’re looking for a brand-new car, a quality used vehicle, or even want to salary package your existing car, there are options to cover anyones needs.
New Cars
With Clear Lease negotiating the purchase, many drivers get access to special Fleet discounts and full manufacturer warranties with this option.
The most commonly novated new cars are EV's, given that they are 100% pre-tax and offer the largest tax savings.
Used Cars
With used cars, the key requirement is that the vehicle meets age and financing criteria - typically, it shouldn’t be older than 12 years at the end of your lease term.
This option can be a smart way to access novated leasing benefits while really reducing the finance amount, by getting a vehicle at a steal of a price because it's already left the dealership.
Your Current Car
You can novate your existing vehicle by refinancing it under a novated lease structure. The equity you have in your car becomes a potential cash lump sum, and the refinanced amount and runnings costs start getting paid pre-tax.
This lets you get the benefits of salary packaging on your current car.
Frequently Asked Questions:
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.
Your lease doesn’t end if you change jobs. You can either transfer it to your new employer, pay privately until the lease ends, or choose to end the lease early.
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).