Guide For Business
Novated leasing for employers
Discover the benefits for your staff and your business
Offer a novated lease to your employees
Attract and retain staff
Offer an employee perk that can save your employees thousands of dollars per year.
Cost effective and simple
We handle most of the admin and ensure there’s no direct cost to your business.
Low obligation for your business
If an employee decides to leave, so does their novated lease.
Novated leasing for employers: How it works
Offering novated leasing to your employers is a simple-to-administer and cost-effective company benefit. It allows your employees to drive their car of choice while saving thousands of dollars in GST and income tax, at little or no cost to your business.
Here’s how it works:
- An employee leases a car through a novated lease provider like Novated Lease Australia.
- The vehicle can be used for business purposes, or entirely for personal use.
- As the employer, you are part of the agreement and commit to deducting the regular lease payments from the employee’s salary payment and remitting them to Novated Lease Australia. This happens as part of your normal payroll cycle.
- The obligations under the lease are ultimately with the employee (the lease or vehicle do not go on the company balance sheet). If the employee leaves, the lease leaves with them.
- The process can be easily automated and incorporated into your payroll processes and software.
- It’s sometimes used as an alternative to having a company fleet of vehicles or offering a car allowance to staff.
Benefits of novated leasing for employers
- Retention of staff: A novated lease offers employees a considerable saving on a personal vehicle and its running costs.
- Attract staff: Offering novated leasing could be the cherry on top for new talent looking to join your business, particularly if that employee has an existing novated lease that you can take on.
- Time savings: A novated lease is typically more time-efficient and cost-effective than administering a traditional company fleet
- Low costs: There is typically no direct cost to the business offering novated leasing.
- Simple operation & administration: Regular payroll deductions for novated leases are easily automated. Administration and compliance are managed by the novated lease provider, not the employer.
- Low obligations: There’s no ongoing obligation on the part of the employer to the vehicle or the lease. If an employee leaves the business, responsibilities under the novated lease agreement remain with them.
- Payroll tax savings: Payroll tax liability for employers is reduced for each employee taking up a novated lease.
- Green incentives: There are significantly greater tax savings on novated leases on eligible electric cars. This can be a nice additional benefit for companies with an active corporate social responsibility program.
"Novated Lease Australia is a provider with a vast array of vehicles available, with tailored plans that suit each employee and their unique circumstances.
“Many of the other companies I spoke to had a high-pressure sales pitch with continued follow up and push to sign you up. NLA found the perfect balance of listening to the requirements, providing informed options and explanations without making you feel pressure. They operate in an efficient yet calm way, ensuring a quality outcome and pleasant experience.”
- Jo Esler, Head of People and Culture at Padua Solutions
Quality outcome
Pleasant experience
)
We do the heavy lifting
There is very little work involved for employers when switching or onboarding as a novated lease customer with us. We take care of:
- Employee onboarding
- The majority of the paperwork
- Contractual and compliance aspects of the transaction
- Training on lease management systems
- 24-hour support
- Webinars/training for staff
- Payroll onboarding
We can even organise your own branded cars for further staff incentives.
)
As an employer what do I need to do?
You simply agree to the novated lease agreement, take regular automatic deductions from the employee’s salary and remit them to Novated Lease Australia.
We know offering novated leasing as an employer can bring massive tax benefits for your employees.
What else do employers need to know?
Are there tax implications for employers that offer novated leasing?
A novated lease is a fringe benefit for employees and is subject to fringe benefits tax (FBT).
However, any fringe benefits tax that would apply to you as an employer can be offset by post-tax contributions from the employee’s salary. This is known as the ‘Employee Contribution Method’ and means there is no fringe benefits tax liability for your business resulting from the novated lease.
We calculate each employee’s novated lease contributions with the appropriate level of pre- and post-tax contributions to ensure the FBT liability is offset fully.
There are also some notable novated lease FBT exemptions:
- Any business use of the vehicle is exempt from FBT
- Eligible electric car novated leases are 100% FBT free (even personal usage)
What happens if an employee leaves?
If an employee with a novated lease leaves your employment, the obligations under the agreement remain with them. It will be their responsibility to continue the lease payments after they have left.
We have an existing novated lease provider – can we switch to NLA?
This will depend on the agreement you have with your current provider. If there is scope for you to work with us, we are experienced at onboarding employers who have an established novated lease program with a minimum of disruption.
Do you work with small companies?
Yes, absolutely. Some novated lease providers only work with large companies, but Novated Lease Australia works with companies of all sizes. We have a dedicated support team that can offer help to small companies with limited HR resources.
