FAQs - Personal benefits
FAQs for Novated benefits
What is Novated Leasing and how does it work?
Novated Leasing can be a cost-effective and convenient way to finance a car and its running costs over terms up to 5 years. A Novated Lease is a three-way agreement between you, a finance company and “novated” to your employer.
A Novated Lease allows you to lease a car using some of your salary before income tax is deducted. 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 means you can pay for your car using pre-tax salary and could reduce the overall amount of tax you pay.
The ability to make payments towards a car from your pre-tax salary is unique to this type of car financing.
Unlike when you purchase a car using cash or a loan, ownership of the car remains with the financier. You have use of the car during your lease. To finalise your lease you must pay the Residual Value. Once your lease has been finalised you may take ownership of the vehicle or explore options for leasing another car.
How can a Novated Lease be tax effective?
A Novated Lease provides you with the ability to make payments towards your car finance and running costs from your pre-tax salary.
Importantly, the Australian Taxation Office (ATO) requires employers to pay Fringe Benefits Tax, or FBT, on benefits they provide to you outside your salary. This includes benefits such as a Novated Lease. For novated leases, your employer may set up your payroll deductions so that the total cost per month is covered with a portion of pre-tax and post-tax deductions.
Where a FBT liability arises, this can be reduced by making post tax-contributions towards the cost of the fringe benefit. For novated leasing the post-tax contributions are typically calculated to reduce the FBT liability to zero. This method is referred to as the Employee Contribution Method or “ECM”. All post-tax contributions in the FBT year will also reduce the reportable fringe benefit amount that would otherwise appear on your annual payment summary at tax time.
What additional savings are available for electric vehicles?
Since 1 July 2022, battery electric vehicles (BEVs) first held and used on or after 1 July 2022 and where no luxury car tax (LCT) has been payable may be exempt from the FBT payable that normally applies to Employers who offer Novated Lease arrangements.
This means that your lease cost is deducted entirely from your pre-tax income. The luxury car tax threshold for the 2025-26 Financial Year is $91,387 for BEVs, which provides a fantastic range of FBT-exempt vehicles to choose from to maximise your savings. While battery electric vehicles are exempt from the FBT payable, they will still attract a reportable fringe benefit amount, which your employer will report on in your annual payment summary. Reportable fringe benefits are considered in relation to certain government benefits.
What is the residual value of a Novated Lease, and why is this important?
The residual value is the amount payable at the end of the lease term. The minimum residual value is a percentage set by the ATO based on the term of the lease. For example, for a 5-year Novated Lease, the ATO sets the minimum residual value at 28.13% of the vehicle cost.
When your lease ends, you will need to pay the residual value to FleetPartners. The amount of the residual value will be set out on your lease quote and your Lease contract.
What are some other benefits of a Novated Lease?
In addition to the potential tax savings,
- You have the flexibility to test drive and choose your own car, or you can ask the FleetPartners team to source your preferred vehicle through our national network of car dealers and manufacturer specials. FleetPartners is one of the largest business and novated leasing providers in the country, buying thousands of cars for our customers every year. Take advantage of our scale and get a great price.
- You have the freedom to choose the make, model, colour and accessories for your new car (subject to availability. Minimum and maximum vehicle values do apply and GST and FBT savings may vary based on the value of the vehicle you lease. Any fitted vehicle accessories can be part of your Novated Lease, and we have a range of aftermarket options to keep your vehicle in great condition over the life of your lease.
- You can lease a new or used car or even a car that you already own. Lease terms range from 1 to 5 years. If leasing a used vehicle, it needs to have a mileage less than 150,000kms at the start of the lease term, and will need to be less 12 years old at the end of the proposed lease term.
- Unlike some other types of vehicle finance which can require sizeable deposits upfront, you can finance the full cost of the vehicle and any fitted accessories. Financing the full cost of the vehicle increases the potential tax savings.
- There’s no minimum number of kilometres you need to drive each year. Estimating your annual distance driven is a key part of putting aside the right amount for running costs over the life of your lease. We’ll help you set a budget for running costs such as comprehensive insurance, registration, servicing, and tyres. You can change your budgets at any time throughout your lease to ensure your budgets are sufficient to cover your running costs. This simplicity can help you avoid unexpected bills, which makes budgeting easier.
- With a Novated Lease, you can save on the GST payable on the initial purchase price of the vehicle. This is because FleetPartners purchases the leased vehicle on your behalf and can therefore claim a GST credit for the GST payable up to the maximum set by the ATO ($6,334 in the 2025-26 Financial Year). We then pass this credit on to you which reduces the amount you need to finance. If your vehicle is above the current threshold of $69,674, you only pay GST on the portion of the initial purchase price above that amount. When it comes time to pay your residual value, GST will be payable by you on that amount.
- GST credits can also be claimed by FleetPartners on the running costs you incur in connection with your lease. This means you save on the GST for any running costs paid out of your budgets – an additional incentive to ensure they are sufficient to cover your actual spend.
- A Novated Lease is conveniently managed through your employer’s payroll with no need for you to separately arrange your lease payments. You’ll have access to an online dashboard and a monthly Driver Statement to help monitor your running cost budgets over the life of your lease.
- Your leased car can be entirely for personal use (you don’t need a portion of business use), and you don’t need to keep logbooks or details of your travel for the purpose of the car lease.
What car expenses can be included in a Novated Lease?
The ATO notes the running costs for a car that includes registration, insurance premiums, repairs and maintenance, tyres, fuel or EV charging costs. All novated drivers can submit a reimbursement claim for running costs, or you can include a fuel card with one of our fuel partners.
Your running cost budgets are reconciled against your actual spend at the end of your lease, so you only pay for the costs you actually incur. Importantly, any surplus funds at the end of your lease will be returned to you through your employer’s payroll with any required tax deducted. If you’ve spent more than anticipated the difference between what has been budgeted and your actual spend will be payable by you to FleetPartners.
How can electricity or charging costs for an EV be included?
You can include a budget for EV charging costs as part of your running cost budgets. The ATO allows you to claim a flat rate of 4.2c per kilometre driven, so we will include a budget in your lease quote based on the number of kilometres you tell us you will drive each year.
At the end of March each year (the end of the FBT year), we’ll ask for your odometer reading and calculate the number of kilometres travelled in that FBT year (1 April to 31 March). You’ll then be reimbursed for your charging costs from your budget.
What are my options for arranging comprehensive insurance?
FleetPartners requires all our drivers to maintain comprehensive vehicle insurance for the full terms of their lease. You have the option to either receive a quote for a competitive fleet insurance policy through our insurance partner, Allianz , or arrange your own insurance.
If you arrange your own insurance, you’ll need to pay the full premium before claiming a reimbursement and provide a valid Certificate of Currency to FleetPartners before the vehicle is delivered and each year when your insurance is renewed. You can then claim back the cost of the insurance from your running cost budget.
1Before making a decision in relation to Allianz comprehensive motor insurance, please read the Product Disclosure Statement, Distributor Statement and Target Market Determination available at https://www.fleetpartners.com.au/resources/insurance-policy-documents and consider whether this insurance product is right for you. FleetPartners is an Authorised Distributor of the comprehensive motor vehicle issuer Allianz Australia Insurance Limited (ABN 15 000 122 850 AFSL 23408). FleetPartners may receive financial benefits in connection with its products and services.
How are claims for running costs like comprehensive insurance processed?
You can either log into your Novated Leasing portal via our website and submitting a claim, or by downloading the claim reimbursement form from the FleetPartners website and email it to us. Your Novated Lease consultant will provide you with details on accessing your portal.
Can I have multiple Novate Leases, or allow a friend or family member to use my car?
Yes you may. All FleetPartners leases are subject to our credit approval criteria, so we will consider any existing Novated Lease payments when determining if you meet the criteria for an additional lease . Whilst a family member or partner may use the vehicle during the Novated Lease, any Novated Lease agreement will be in your name, and the vehicle will be registered to you. You will need to consider the degree of cover your insurance policy provides for additional drivers. All the obligations under your lease will remain your responsibility even if it is being driven by a family member or friend.
Are there restrictions on the type of car that can be leased?
Most cars and some light commercial vehicles can be eligible for a Novated Lease, provided they meet the definition of a car as defined by the ATO. The ATO defines a car to be a motor vehicle designed to carry fewer than 9 passengers and can carry a load less than 1 tonne. Some employers may only allow their employees to lease low or no-emission vehicles like EVs, so check with your employer or your Novated Lease consultant if you have questions regarding whether a vehicle is eligible.
If I have already purchased a vehicle, can I set this up as a Novated Lease?
Yes. The process is called a Sale and Leaseback. Your Novated Lease will operate in the same way as if we had purchased the vehicle from a dealer, but there may be some differences in the way tax is applied to the vehicle and the lease. For example, you will not be able to claim back the GST on the vehicle.
If your vehicle is a BEV and you want to take advantage of the BEV FBT exemption, it is important to confirm it was available for first use after 1 July 2022 to be considered eligible for the FBT exemption. This is determined based on the date that the car was first registered (by you or the first owner). LCT must also never have been payable on the BEV at the time of first sale as a new car or any subsequent sale as a used car.
Is there a maximum cost of a vehicle that can be part of a Novated Lease?
FleetPartners currently leases vehicles up to a maximum value of $500,000 at the commencement of the lease.
Do FleetPartners charge fees for a Novated Lease?
Like any financial commitment, it’s important to understand the fees and charges that may be payable during your lease. Your FleetPartners Novated Lease may include:
- a monthly lease establishment fee;
- a fixed monthly lease management fee, to cover our costs to manage your lease and budgets; and
- a one-off vehicle security register fee of $29.95 at the time of lease settlement, which covers the cost of registering our security interest in your vehicle.
These fees are disclosed on the Novated Lease quote you receive before you apply for your lease.
It’s also important to understand that the finance payments on your lease include a component of interest and, like many financial products, fees and charges are payable if you decide to terminate your lease early.
Is brokerage or a commission payable on top of FleetPartners’ finance rate?
No. One of the benefits of a FleetPartners Novated Lease is that there is no hidden brokerage or commission payable on top of your finance payments.
What happens if my running costs change during the lease?
Your running cost budgets are designed to put a consistent amount of money aside each month so that there are sufficient funds throughout your lease to cover your budgeted running costs including insurance, fuel or charging, maintenance and tyres. We estimate these costs based on the information you provide us when you request a quote regarding the amount you’ll use your vehicle. If you find that your actual running costs are more or less than what was budgeted – for example, because the amount you are driving changes – we can adjust your budgets so that a different amount is deducted each month.
You’ll only ever pay for the running costs you actually incur – so if you have surplus funds set aside at the end of your lease, they’ll be returned to you through your employer’s payroll (this is to ensure the appropriate tax treatment). On the other hand, if your actual costs are more than what has been set aside, you’ll need to pay these as a balancing deduction from your salary).
How can I explore the potential benefits of a Novated Lease?
Our website is a great resource that includes an easy-to-use Novated Lease calculator. You can choose the make, model and variant of car you are interested in, provide your annual gross salary, and it will estimate how much you’ll save compared to financing the same vehicle using an equivalent car loan.
If there’s a car you’d like to get an obligation free quote on, call us on 1300 666 001 or request a call back via our online form.
Will requesting a quote on a Novated Lease affect my credit score?
No, simply requesting a quote (or even multiple quotes) will not impact your credit score. A credit check will only be recorded on your credit file if you decide to proceed with a Novated Lease application.
If I don’t know which vehicles fit within my budget, can FleetPartners help suggest some options?
Yes, our team of Novated Leasing experts can guide you through a range of vehicles to fit your needs and budget. We can help you with research and leverage our dealer network and manufacturer specials to get a great price and find the car of your dreams.
Alternatively, you can go for a test drive of your preferred car and negotiate your price with a dealer or private seller. Once you have a quote, we can place the order on your behalf.
How do I start the Novated Leasing application process with FleetPartners?
Once you understand how Novated Leasing works and have decided on the vehicle you’d like to lease, we’ll guide you through the finance application process. This will include verifying your identity, performing a credit check, and confirming your eligibility for Novated Leasing with your employer.
If you are leasing a new or used vehicle supplied by a dealer, once your application is approved, we’ll order the vehicle and provide you with an estimated delivery date. If you’ve asked to include any accessories or aftermarket options like window tinting or paint protection, we’ll arrange for these to be fitted directly with the dealer.
Shortly before delivery of your new vehicle, we’ll be in touch to arrange execution of your Novated Lease contracts by you and your employer. Once these are finalised, FleetPartners will arrange payment for the vehicle with the dealer. The vehicle will then be ready for delivery.
If you’re leasing a vehicle you already own, that is under finance with another provider or that is being sold privately, there are a few extra steps in the process – contact our team of Novated Leasing experts to discuss your circumstances.
What happens if I order a car and change my mind about proceeding with a Novated Lease?
If your vehicle hasn’t yet been delivered, you can cancel the order – if FleetPartners has paid any non-refundable deposits or incurred any out-of-pocket expenses (for example, due to custom accessories), you’ll need to pay these to us.
If your vehicle has been delivered, your lease has commenced, and the usual lease termination process (including applicable fees and charges) will apply.
Can I still Novate my vehicle if I have already placed an order with a dealer?
Yes, you can still novate your vehicle even if you have already placed an order with a dealer. You can let the dealer know that FleetPartners will be your Novated Leasing provider, and we will coordinate with the dealer to arrange payment and any required paperwork.
Once my Novated Lease has started, what happens if I leave my employer or go on a period of unpaid leave?
Novated Lease payments need to be made by your employer from your salary – so if you leave your job or go on a period of unpaid leave, the novation of your lease will be reversed. This means that the lease will revert to a finance lease directly between you and FleetPartners.
When the novation is reversed, we will reconcile your running cost budgets against your actual spend as you will be unable to claim any budgeted running costs whilst your lease is between you and FleetPartners directly.
From there, you have a few different options:
- You can continue to pay the finance component of your lease directly to FleetPartners for the term of the lease. At the end of the term, you will pay the residual value of the vehicle to us and will then own your vehicle.
- If you accept a role with another employer and they offer Novated Leasing, you can novate your lease to your new employer. This will also mean you can recommence deductions and claims for budgeted running costs.
- You can elect to terminate your lease early, in accordance with the early termination procedure set out in your lease terms and conditions. Fees and charges apply to early terminations.
If you need to explore any of these options, we’ll work with you and your employer to make the process as smooth and transparent as possible.
What happens at the end of a Novated Lease?
If your Novated Lease is coming to an end, you might be wondering what happens next. Whether your Novated Lease was for two, three, four, or five years, your options are exactly the same: you can pay out your residual value, extend your lease by refinancing, or even upgrade to a new car. We’ll be in touch before your lease ends to discuss the options below.
Option 1: Pay out your lease and keep your car
Once your lease has been finalised by paying the residual value, ownership of the vehicle can be transferred to you by FleetPartners. If you take ownership of the vehicle, it’s already registered in your name and you don’t need to transfer ownership with the relevant state or territory roads authority. Any services associated with your lease (for example, insurance arranged through FleetPartners or fuel cards) will be terminated, and we will reconcile your running cost budgets against your actual spend.
Option 2: Extend your lease
If you’d like to keep leasing your existing vehicle, you can extend the term of your lease providing it still meets our maximum vehicle age and kilometre limits and any other credit criteria. You’ll need to let us know before the initial term of your lease comes to an end so that we can provide you with a quote for the extended term.
Option 3: Upgrade to a new car
If you’d like to lease a different vehicle, we’ll first need to finalise the lease for your existing lease, including reconciling your running costs against your budgets. You can then enter into a new lease for your chosen vehicle.
For further information about your end of lease options, speak to one of our Novated Leasing experts.
Disclaimer: Information was current at time of publishing and is subject to change. This information is general in nature and does not constitute financial or tax advice. All applications are subject to eligibility and credit approval criteria. Terms and conditions, fees and charges apply.