A novated lease is a fantastic perk for your employees. But this type of agreement also comes with a range of benefits for employers too. This includes increased employee satisfaction, reducing administration required on company vehicles, and much more. Making the most of novated lease benefits for the employer is only possible with the assistance of the leasing experts, and at CarBon, we can help. Find out more about our EV leasing solutions today!

This is how a novated lease works on the employer’s end

A novated lease follows a fairly straightforward process for employers. In essence, the employer offers for the employee to lease a vehicle through a provider such as CarBon. Then, the provider ‘novates’ the responsibility of the lease payments to the employer.  The employer then makes these payments on behalf of the employee, from their pre-tax income. There’s minimal effort required on the part of the employer, and if the employee does leave the company, the lease goes with them, eliminating any liability or headaches for the employer!

Benefits of a novated lease for a company

A novated lease is an attractive employee benefit. However, this kind of flexible arrangement comes with a wide range of great benefits for the employer too, so everyone wins!

Improved employee happiness

One of the most immediate novated lease benefits for an employer is the boost this kind of offering gives to employee happiness. When an employer offers a novated lease as an option, it gives employees options, and a wonderful way to get a brand new vehicle without having to purchase it themselves.  This lease also helps your staff to save money on taxes, which is an excellent result. And when the lease agreement itself is easy to understand and runs without a hitch, you can expect employees to be even happier. In the long run, this can contribute to an improvement in employee loyalty and workforce morale.

There’s no financial risk to the employer

The way that a novated lease is structured means the financial risk to the employer is essentially non-existent. This is because, while the employer does facilitate the lease by making payment from the employee’s pre-tax income, the employer never takes ownership of or liability for the lease itself.  As mentioned earlier, if the employee decides to leave the company, the lease will go with them. That means the company is never left with any liability on the residual amount owing, and does not need to continue making payments. That means that for employers, a novated lease is a fantastic incentive to offer employees, and it comes with extremely minimal risk!

Less administration needed

Managing a fleet of company cars inevitably creates a large amount of administrative work. However, if you offer novated leases, there’s no need to maintain a pool of company vehicles. Your leasing provider, in this case CarBon, will handle all of the important paperwork, including insurance, vehicle maintenance, and documentation involved with the lease agreement. All the employer has to do is deduct the payments from the employee’s pre-tax salary! Lightening administrative load is a huge plus for any company, and this is one of the key benefits of a novated lease for the employer.

Attractive salary packaging

Offering novated leases as part of a salary package is a big tick for many would-be employees. This makes your company more appealing, and can certainly contribute to attracting the best and brightest employees. People appreciate a novated lease because it can allow for more disposable income down the track. They won’t need to dip into their savings or take out a loan to purchase a car, while employers enjoy a cost-effective way to increase their salary packing offerings without any expense.

May be able to claim tax deductions

In some cases, employers can claim tax deductions on vehicle-related expenses. This includes costs like leasing fees, which is particularly true if the car itself is used for work purposes on occasion. For example, if the employee is driving their van or truck between job sites. Note that the deductions an employer can claim will vary greatly depending on the scenario and the agreement itself.  Employers can also reduce their payroll tax liabilities with novated leasing. Because the lease payments come out of an employee's pre tax income their gross salaries are reduced. If you have any questions regarding payroll tax implications and deductions, contact CarBon today!

How can an employer set up a novated lease?

Setting up a novated lease for your staff members is an incredibly easy process when you work with CarBon. It will look something like this:
  1. You contact CarBon, and our experts will explain how the agreement works, and what we need from you.
  2. We’ll put together the documentation, including all the nitty gritty details.
  3. You set up the financial side of things with your payroll team, ensuring that the payments are made from your employee’s pre-tax pay.
  4. Explain the advantages of a novated lease to the rest of your staff members!
We can usually help you complete this process in a few weeks, but the timeframe does of course depend on your internal procedures. If you have any questions, our team is always here to help!Enjoy the employer benefits of novated leases with CarBon If you’re an employer, and you’re looking for savvy ways to provide incentives to retain and attract staff, an EV novated lease is a great option. This type of lease comes with plenty of benefits for you and your business, as well as the environment! At CarBon, we provide flexible novated leases for electric vehicles, with excellent terms. Speak to one of our consultants today.

FAQs about employer benefits

Do employers benefit from a novated lease?

Yes, employers can benefit from providing novated leases to employees by offering a cost-effective perk that boosts employee satisfaction, reduces administration, and lowers financial risk.

Who pays the FBT on a novated lease?

The employer typically pays the Fringe Benefits Tax (FBT) on a novated lease, although the cost can be passed to the employee through their salary package. Keep in mind that the FBT may not apply if the vehicle being leased is an electric vehicle.

Is a novated lease better than a company car?

A novated lease offers more flexibility than a company car. There’s less financial commitment, as the company does not have to purchase a vehicle. It also allows employees to choose and manage the vehicle they want to lease, which your workers may find more appealing.

Can an employer claim depreciation on a novated lease?

Employers can’t claim depreciation on a vehicle under a  novated lease. This is because the vehicle is owned by the leasing provider (until the lease ends and the employee pays the residual), not the employer.

What happens to the novated lease if my employee resigns?

If an employee resigns, the novated lease goes with them. That means the employer isn’t responsible for lease payments or related obligations. This means that providing novated leases for your employees is relatively low-risk, and still comes with significant benefits.