Description of Product
A novated lease is a three-way agreement between an employer, an employee and the financier. The arrangement is simple and only involves a few easy steps.
The employee leases the vehicle from the financier
The employee, employer and the financier enter into a novation agreement
The employer agrees to deduct the lease rentals from the employee’s salary
The employer pays the lease rentals directly to the financier
Employee benefits include the freedom to choose the preferred type of car, subject to financier acceptance, and the ability to move the lease to another employer.
Employer benefits include the elimination of administration of a fleet of vehicles as well as no liability recorded on the balance sheet.
A novated lease can have income tax, GST and fringe benefits tax implications and you should always seek independent tax advice on the effectiveness of a novated lease.