A novated vehicle lease is an agreement between an employee, their employer, and a finance company.
In it's most basic form, the novated lease is the salary packaging of a monthly vehicle lease payment so that the employer pays it from the employee's pre-tax income. The employee gets the benefit of selecting their own vehicle and saving on tax. The employer gets the benefit of not having a company vehicle on hand should the employee leave their job.
The vehicle lease agreement is between the employee and the finance company. The novation agreement exists only while the employee is employed by the employer. Should they leave their job then the novation agreement ceases to exist and the employee is solely responsible for the lease payments. In certain circumstances the vehicle lease agreement may be novated to the new employer.
Novated leases can be "fully maintained" or "stand alone".
A fully maintained novated lease is where the finance company manages all costs associated with the running of the vehicle. These become part of the employees salary package.
A stand alone novated lease covers the lease payments and all other running costs are looked after by the employee.
If you think that a novated lease might be for you or if you would like some indicative repayment options - click here to request a call back from KRW
Note that KRW Finance are not tax or financial advisors. All information is general in nature. You should seek the advice of a registered tax practitioner before entering into any finance agreement