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Novated Car Leasing and Salary Sacrificing

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* The comparison rate displayed is calculated for a loan of $30,000 over 5 years. The results from this calculator should be used as an indication only. Quoted repayments are based on advertised rates and do not include lender fees and charges. Results do not represent either quotes or pre-qualifications for a loan. The specific details of your loan will be provided to you in your loan contract. It is advised that you speak with us so that we can provide you with advice that is tailored to your situation.

Jade Car Loans provides Novated Car Leasing with Salary Sacrificing for employers seeking to provide a vehicle for an employee to use in their role and both parties choose to include the cost of the car in the salary package.

Let’s start this explainer with a definition: novation essentially means to replace an obligation with another obligation or one party to a deal with another. A Novated Car Lease is a financial agreement between an employee their employer and the lender who is financing the car purchase.

Novated Car Leasing with Salary Sacrificing: Key Features

  • The employee selects the car they want and Jade arranges the best car financing deal available at our signature low interest rates.
  • The employee then ‘novates’ the lease contract to their employer. That is, the employer replaces the employee as the party to the lease contract.
  • The employer covers the car expenses and deducts them from the employee’s pre-tax income. So the employee is ‘sacrificing’ income in return for a fully-maintained motor vehicle.
  • Fixed monthly lease payments paid by the employer for the fixed term of the consumer car lease.
  • Leasing terms from 12 months to 84 months, depending on the value of the vehicle.
  • Residual determined according to ATO guidelines.
  • Employers can also covers the operating costs, eg insurance, rego, petrol, servicing, of the vehicle.
  • Employer deducts the lease payments and operating costs from the employee’s pre-tax salary.
  • Employer receives the tax deductions, claims GST and addresses any FBT issues according to ATO guidelines.
  • Employee has a reduced taxable income, possibly pays tax at a lower rate and receives more net income and the use of a full maintained motor vehicle.
  • When all payments including the residual are finalised, the ownership of the car reverts to the employee.

Your consultant can elaborate further on the details and benefits of Novated Car Leasing with Salary Sacrificing for both employee and employer. This type of car finance can be utilised by full-time and part-time employees for the purchase of both new and used cars.

While many lenders offer this commercial finance product, Jade, as a car loan broker, has the resources to consider novated lease offers from many more sources. We present you with the best deal available on the market to suit your individual requirements and structured to suit your business.

Speak with a Jade Consultant to discuss a novated car leasing solution for your business vehicle. Call 1300 000 003

28 Nov Today's
best rates
Today's Business Rate
From {{Advertised Rate Only}} %*

*The Interest Rate is calculated on a Secured Loan for business use, effective 28/11/2023 and subject to change. WARNING: The interest rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts may result in a different interest rate.

Today's Consumer Rate
From {{Advertised Rate Only}} %
Comparison Rate
From {{Comparison Rate Only}} %**

**The Comparison Rate is calculated on a Secured Loan of $30,000 fixed for a term of 5 years, new goods, effective 28/11/2023 and subject to change. WARNING: The Comparison Rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts may result in a different comparison rate.

FAQs: Novated Car Leasing

Novated Leasing may imply complexity but the concept is quite straightforward and this type of finance offers benefits to employers wanting to provide a vehicle for an employee. To simplify what can be perceived as complex, we’re providing these brief responses to very direct questions. To discuss how Novated Leasing may work for your particular business, please contact us.

What is the best way to finance a car for an employee?   

Businesses that are looking to provide a vehicle for an employee has two main options as to how they can proceed. The business can purchase the vehicle and run it as a business asset and allow the employee use of the vehicle in carrying out their role. This is considered as supplying a company car. The automobile is owned by the business and can be financed by Chattel Mortgage, Lease or CHP. The employee has the use of the car but no right to ownership. FBT implications may apply.


The other option is a Novated Car Lease with Salary Sacrificing. With this type of finance, the employer is purchasing the vehicle on behalf of the employee. The employee is working towards ownership of the vehicle. The employee sacrifices the portion of their salary required to cover the repayments and other costs involved in the upkeep of the vehicle. When the finance term ends and all payments are finalised, the ownership of the vehicle reverts to the employee.


Tax benefits can be realised by both parties.

What does novated mean?   

Novated or to novate, is a legal term which is used in legal documents such as finance contracts.


Novated means replacing an obligation of one party with another party. In the case of a Novated Lease, the obligation is the debt to the lender. The lease on a motor vehicle.


The parties are the employee and the employer. The employee first instigates and sources the vehicle and the loan on the vehicle is novated to the employer. The employer takes on the obligation of repaying the loan.


When the loan is finalised, the ownership of the car is signed over to the employee.

What is salary sacrificing?   

Salary sacrificing is the term for when an employee sacrifices or gives up part of their pre-tax salary to go towards the purchase of a motor vehicle. A portion of their salary is retained by their employer to cover the repayments and other expenses associated with the car that is being purchased.


That portion of the salary is seen as being sacrificed because the employee does not receive it in their pay packet. The salary portion is deducted from pre-tax salary so the employee does not pay tax on that amount.


In reality, it is going towards the acquisition of a car so the reward for sacrifice is realised when they achieve ownership of the vehicle.

What are the benefits of novated car lease?   

Both employee and employer can realise benefits from a novated car lease.


The employer makes the payments on the lease and covers the costs of the vehicle maintenance and expenses and can deduct those costs in accordance with tax rulings. They get the benefit of being ib a position to provide a vehicle for an employee without the real burden of the costs.


The employee realises a benefit in the reduction in their pre-tax salary. The sacrificed amount is deducted before income tax is calculated. This may put the employee in a lower tax bracket and thus reduce their tax obligation. The employee also realises the benefit of owning their own vehicle at the completion of the loan term.

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