Salary packaging with a novated lease is a popular car financing option for many Australians. It’s an easy way to save money through tax savings and gain car ownership. It’s much easier than it sounds, and beneficial to those wanting to save those extra dollars when they buy and finance a new car.

At Novated Choice, we’re committed to making the process of purchasing a vehicle as easy as possible. That’s why we take care of things from start to finish, so all you need to focus on is hitting the road. With us, you can start driving without the hassle of documents, paperwork and the ins and outs of financing. However, we’ll always let you know your options, one of which is salary packaging.

But what does the term ‘salary packaging’ actually mean? Let’s break it down.

Salary Packaging Explained:

Salary packaging refers to the three-way agreement made between an employee, the employer and the novated lease company. In the agreement, it ‘packages’ your car lease payments and running costs into your salary. So, instead of receiving your full salary after tax, your employer will deduct the payments from your gross salary before tax, and then pay you your income. So, your taxable income is lower, and you pay less tax.

Essentially, your employer agrees to make your lease payments for you by deducting the funds from your pre-tax salary. This bundles all your costs into one regular payment.  

How Does It Work?

The payment that is deducted from your pre-tax salary is usually one lump sum payment that is made up of:

• Fuel costs
• Insurance
• Registration
• Maintenance costs
• Tyres
• Lease payments

By taking the payment from your gross salary, you lower your taxable income and therefore pay lower tax. As the deducted amount is one payment, it helps to budget and manage your finances, as it is an expected and steady payment. Find out how much you can save using our easy-to-use calculators. 

As the agreement is made between an employee and an employer, a common question asked is how a novated lease works if you change jobs. If you leave your job while you have a novated lease agreement, you are responsible for transferring it to your new employer or continuing to make the payments yourself from post-tax income.

So, buying and financing your new car with a novated lease can help you save tax money and make it easy for you to manage your payments through salary packaging. It’s important to explore all your options when you choose a novated lease to ensure you’re making the right decision for you and your lifestyle. 

Is a Novated Lease Right for You?

To get a novated lease on your new vehicle and be eligible for salary packaging, you need to be a salaried employee. If your employer agrees to enter into the agreement, you will be eligible.

When you’re approaching the end of your lease, you’ll have options. You can choose to:

• Keep your car permanently by purchasing it at a reduced rate
• Upgrade to another car
• Extend your lease

So, you don’t need to decide right away, and you can choose how you want to continue with your novated lease. As always, Novated Choice will help you navigate your options, and once you make a decision, we’ll handle the nitty-gritty for you.

Get started with Novated Choice today for hassle-free driving. 

Hit the Road with Novated Choice

We’re dedicated to ensuring you understand your options and choices when you use Novated Choice. Chances are, a novated lease is right for you and will help you save valuable money. You can get on the road with your new car and trust that everything has been dealt with in the background by us.

Novated leases give you access to a car you may have thought you couldn’t afford, so we make it easy for you to bring your vision to life. A car is a vital element of your lifestyle and convenience, so we’ll make sure all you need to focus on is where you’re going first.

If you’re ready to get started or want to learn more about your salary packaging options, contact our team today, and they’ll be happy to help.