News Type: Blog

For HR managers, one of the key challenges is offering benefits that attract, engage, and retain top talent. A novated lease is a powerful tool that can enhance your organisation’s benefits package while providing valuable tax advantages and convenience to employees. Let’s walk you through the essentials of novated leasing, its advantages for both employers and employees, and how HR managers can effectively integrate it into their salary packaging offerings. 

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 What Is a Novated Lease? 

A novated lease is a three-way agreement between an employee, the employer, and a leasing company. It allows employees to lease a vehicle of their choice using their pre-tax salary, which reduces their overall taxable income. The employer facilitates the payments through salary deductions, and the leasing company handles the lease management and administration. 

Key components of a novated lease include: 

– Lease Payments: Deducted directly from the employee’s pre-tax salary, offering significant tax savings. 

– Bundled Costs: A novated lease can cover registration, insurance, maintenance, and running costs, making it easier for employees to manage their vehicle expenses. 

– Flexible Lease Terms: Typically ranging from 2 to 5 years, with the option for employees to buy, re-lease, or sell the vehicle at the end of the lease. 

For HR managers, understanding the mechanics of novated leasing is the first step in offering it effectively as part of your employee benefits. 

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 Benefits of Novated Leasing for Employees 

Integrating novated leasing into your company’s benefits package can provide a host of advantages for employees: 

1. Tax Savings

With a novated lease, employees use their pre-tax dollars to pay for the vehicle, reducing their overall taxable income. For example, if an employee earns $100,000 annually and pays $10,000 in lease payments, their taxable income would be reduced to $90,000. This reduction can lead to substantial savings, especially for those in higher tax brackets. 

2. Simplified Vehicle Ownership

A novated lease bundles all vehicle-related expenses into one convenient payment. This means that employees no longer must worry about separate bills for registration, comprehensive insurance, servicing, and fuel costs. Everything is handled through one easy-to-manage salary deduction, simplifying the financial side of car ownership. 

3. Access to Newer Vehicles

Novated leasing gives employees the flexibility to drive a new vehicle every few years without the burden of depreciation or selling a used car. This can be especially attractive for those who want the latest safety features, fuel efficiency, or EV technology. 

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Why Offer Novated Leasing as an HR Manager? 

For HR managers, offering novated leasing can make your company more competitive in the job market and provide a valuable incentive for current employees. Here’s why it’s a smart choice: 

1. Boost Employee Satisfaction and Retention

Everyone values benefits that help them save money and make their lives easier. Novated leasing offers both by reducing taxable income and simplifying car ownership. This can lead to higher employee satisfaction and a higher likelihood of staff sticking around. Employees who feel their company cares about their financial wellbeing are more likely to stay longer. 

2. Attract New Talent

The jobs market is currently competitive in Australia with employee mobility at a decade high. In a competitive market, offering novated leasing can differentiate your company from others. It’s an attractive perk that many job seekers may not find elsewhere. When candidates compare job offers, a comprehensive salary packaging option that includes novated leasing can tip the balance in your favour. This is especially true if you are a smaller organisation that is up against a larger corporate for the same talent pool. 

3. Cost-Effective for Employers

Novated leasing is generally a cost-neutral benefit for employers. The lease payments come directly from the employee’s salary, meaning there’s no additional out-of-pocket expense for the employer. Additionally, by reducing employees’ taxable income, there can be payroll tax savings for the company as well. 

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How to Implement Novated Leasing in Your Benefits Package 

Integrating novated leasing into your company’s salary packaging offerings can be straightforward with the right approach. Here are some steps for HR managers to follow: 

1. Choose a Trusted Leasing Provider

Partnering with a reputable novated lease provider, like CarBon Novated Leasing, ensures that your employees receive competitive rates and excellent customer service. Look for providers who can manage the entire process, from vehicle selection to lease administration. 

2. Educate Your Employees

A good partner can hold information sessions or webinars to explain the benefits of novated leasing for employees in your organisation. They should have resources like FAQs, brochures, or online calculators to help employees understand their potential savings. Common questions that come up include: 

– How does a novated lease reduce taxable income? 

– What happens if I change jobs? 

– What vehicles are eligible for a novated lease? 

Educating employees ensures they make informed decisions and see the true value of the benefit. 

3. Simplify the Administration Process

Work with your leasing partner to simplify the administration process. A good provider will assist with paperwork, provide lease agreements, and offer ongoing support for any queries from your payroll team. This ensures that HR managers don’t have to spend excessive time managing the program. 

4. Promote the Benefit Across Internal Channels

Make sure that your employees know about the availability of novated leasing through internal communication channels like email newsletters, the company intranet, or HR portals. Highlight success stories or testimonials from employees who have benefited from the program. 

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Common Questions HR Managers Face About Novated Leasing 

1. What if an Employee Leaves the Company?

If an employee leaves the company, they can continue the lease by taking over the payments themselves, or they can transfer the lease to a new employer if the new employer supports salary packaging. 

2. Are There Vehicles That Don’t Qualify for Novated Leasing? 

Most new and used cars are eligible, including electric vehicles (EVs) and hybrids. For EVs, there are additional tax benefits like FBT exemptions if the vehicle falls below the luxury car tax threshold. 

3. What Are the Costs Involved for Employers?

The lease payments are deducted from the employee’s salary, making it a cost-neutral benefit. The only cost to employers is the time spent managing the arrangement, which can be greatly minimised with a good leasing provider. 

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 Simplifying Employee Benefits with Novated Leasing 

For HR managers, adding novated leasing to your company’s benefits offering can provide a win-win for both employers and employees. It’s a straightforward way to help your team save money, enjoy driving newer vehicles and manage their finances more effectively. By working with a trusted partner and educating your workforce, you can integrate novated leasing smoothly into your salary packaging program, enhancing your company’s appeal in the job market. 

If you’re ready to explore how CarBon Novated Leasing can help simplify the process for your business, contact us today for more information and to set up a consultation. 

Are you thinking about getting a new car but unsure how to finance it? Or maybe instead of buying it outright you want to see if there is a way to save your cash for something else? If you’re an Australian employee looking for a cost-effective way to get behind the wheel, a novated lease could be the solution you’ve been searching for. Not only does it provide flexibility, but it also offers significant tax savings that make your next car more affordable. 

The best way to estimate how much you can save is by using our novated lease calculator. In this guide, we’ll explain how a novated lease works, what kind of savings you can expect, and how our calculator helps you make an informed decision about your next vehicle. 

What is a Novated Lease? 

A novated lease is a type of salary packaging arrangement where your employer pays for your car lease using your pre-tax income. This reduces your taxable income, which could result in you paying less tax throughout the year. In simple terms, it’s a three-way agreement between you, your employer, and the leasing company. 

Here’s how a novated lease works: 

– You choose your car: Whether it’s a brand-new vehicle or a used one, you get to pick the car that suits your needs. 

– Lease payments come from pre-tax income: Your employer makes the lease payments directly from your salary before tax, lowering your taxable income. 

– Bundled car expenses: Fuel, insurance, maintenance, and registration can all be included in your lease, meaning one simple payment covers all your car-related costs. 

 This setup is particularly beneficial because it provides substantial savings and removes the headache of dealing with multiple car-related expenses. 

How Much Can You Save with a Novated Lease? 

One of the biggest draws of a novated lease is the tax savings. Because the lease payments are deducted from your pre-tax income, your taxable salary is reduced, meaning you could be paying less tax overall. 

The actual amount you can save depends on several factors: 

– Your salary: Middle to higher income earners typically see greater tax savings with a novated lease. 

– The car you choose: The price of the vehicle, running costs, and how long you lease it for will all influence your overall savings. 

– Lease term: The length of your lease (usually between two and five years) will also impact your total savings. 

What Expenses Are Covered in a Novated Lease? 

When you lease a car through a novated lease, you’re not just covering the cost of the car itself. Many of the everyday expenses of car ownership can be bundled into your regular payments, saving you time and stress. These can include: 

– Fuel or electricity (for EVs): Keep your car running without worrying about fluctuating fuel prices. 

– Insurance: Comprehensive car insurance costs can be part of your regular pre-tax payment. 

– Maintenance: Regular servicing and repairs are covered, so you won’t need to deal with unexpected repair bills. 

– Registration: Your car’s registration can also be part of the package, saving you an annual hassle. 

By bundling all these costs into one regular payment, you can simplify your budget and enjoy the peace of mind that comes from knowing your car expenses are taken care of. 

Some novated leasing providers also allow you to do a non-maintained novated lease. If you just want the car and prefer to look after the running costs yourself this can often be accommodated. This arrangement is almost always cheaper than normal car finance because you don’t pay GST for the car and your lease payments come out of your pre-tax salary which reduces your taxable income. 

 Why Use a Novated Lease Calculator? 

A novated lease calculator helps you estimate the potential savings from salary packaging your car. Our CarBon calculator allows you to enter details like your salary, the vehicle you’re interested in, and the lease term. From there, the calculator shows you the tax savings, the cost of the lease, and how much you’ll save over the term of the agreement. 

Using a novated lease savings calculator gives you a clear picture of the financial benefits of novated leasing before you make a decision. It can help you compare different vehicles, lease terms, and overall costs to find the best option for your situation. 

 How to Use Our Novated Lease Calculator 

Here’s how easy it is to use the CarBon novated lease calculator to see how much you can save: 

1. Enter your annual salary: Input your gross income to calculate how much you can save on tax.
2. Choose your car: Pick the car you’re interested in leasing. You can select from popular models, including Toyota, Tesla, Ford, and more.
3. Select your lease term: Decide how long you want the lease to last—most leases run between 2 to 5 years.

Once you’ve entered this information, the calculator will show you: 

– Weekly or monthly payments: How much you’ll be paying regularly under the lease. 

– Tax savings: A breakdown of how much you’ll save based on your salary and the car’s costs. 

– Total cost: The overall cost of the lease, including any residual value if you choose to buy the car at the end of the lease. 

How a Novated Lease Compares to Buying Outright 

Many people wonder whether leasing or buying a car outright is a better financial decision. Let’s break down the differences between novated leasing and buying outright. 

– Upfront costs: With a novated lease, you typically don’t have to make a large upfront payment or deposit. In contrast, buying a car outright requires you to pay the full purchase price upfront, which can strain your cash flow. 

– Tax benefits: With a novated lease, you get the advantage of tax savings by paying for the lease with your pre-tax salary. When you buy a car outright, you don’t get these tax benefits. You also don’t pay GST on the purchase of the vehicle and the ongoing running costs when you get a novated lease. All of this results in significant savings that wouldn’t be available to you if you chose to purchase the vehicle outright. 

– Flexibility: Novated leases offer flexibility. At the end of the lease, you can choose to buy the car for its residual value, extend the lease, or sell the vehicle and lease a new one.  

Using a novated lease calculator will help you weigh these factors and decide which option is best for your financial situation. 

Conclusion: How Much Can You Save with a Novated Lease? 

With a novated lease, you can significantly reduce the cost of owning a vehicle through tax savings and bundled car expenses. It’s an attractive option for many Australian drivers, particularly those who want flexibility and financial benefits. 

Ready to see how much you could save? Use the CarBon novated lease calculator today to estimate your potential savings and find out if a novated lease is the right choice for you. Whether you’re eyeing a Toyota, Tesla, or another vehicle, our calculator will help you make an informed decision that could save you thousands over the life of the lease. 

 

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.

Electric vehicles (EVs) have been a popular topic for a number of years now. It’s no surprise that the world of EVs continues to evolve at a rapid pace, as new government incentives appear and manufacturers commit to electric-only futures. More Australians are making the switch to electric cars, keen to reap the benefits on offer during this electric vehicle revolution.

So, how do you get the best deal on a new EV and make the most of the positive outcomes on offer? That’s where a novated lease through CarBon Leasing comes in.

In this blog, we’ll dive into some of the latest news surrounding electric vehicles in Australia. We’ll also explain why now might be the perfect time to consider a novated lease for your next vehicle. And with our easy-to-use online calculator, you can quickly see just how much you could save by leasing your dream EV in Australia!

The Australian government continues to push for faster EV adoption

One of the biggest stories in the EV world is the Australian government’s continued push to accelerate electric vehicle adoption. 

The government is making it more affordable than ever to own an electric vehicle with a number of tax rebates available. They also continue to invest significant sums in installing and improving charging stations all over the country, an important step in making this essential infrastructure more accessible for EV owners.

While all of these incentives and the positive approach by the federal and state governments are fantastic news, pricing may still present a barrier to some would-be EV buyers. Therefore, it’s essential that you understand your financing options. Keep in mind that you don’t need to buy an electric vehicle outright to enjoy all the benefits.

At CarBon Leasing, our novated leasing options allow you to take full advantage of these government incentives while also saving on taxes and managing your expenses efficiently. We have plenty of experience in helping our clients get the best deals on a novated lease for their brand new EV, which is more important than ever during this electric vehicle revolution!

Why a novated lease makes sense right now

With all the buzz around electric vehicles, it’s easy to get caught up in the excitement. But before you rush out to buy a new EV, it’s important to consider your financing options. A novated lease through CarBon Leasing can be a smart move, especially in today’s financial climate. Below are a few reasons why you should consider a novated lease for your EV.

1. Maximise your tax savings

One of the key benefits of a novated lease is the ability to use your pre-tax income to pay for your vehicle. This can significantly reduce your taxable income, leading to fantastic tax savings. The additional government incentives for EVs mean that these savings can be even more pronounced, leaving you with more money in your pocket at tax time.

2. Bundle your costs

A novated lease means that all your vehicle-related expenses, such as maintenance, insurance, and registration, are bundled into one payment. This means you can enjoy the benefits of owning an EV without the hassle of managing multiple bills each month. If you buy a car outright, however, you’ll have to handle all of these bills yourself.

3. Stay ahead of the curve

New EVs are appearing on the market regularly, and the industry continues to evolve, driven by new research and development. A novated lease gives you the ability to upgrade your vehicle every few years, ensuring that you’re always driving the latest and most efficient model. Plus, with CarBon’s extensive network of partners, you’ll have access to a wide range of the best EVs to choose from!

What does the future of electric cars in Australia look like?

The future of EVs in Australia is bright, and there are a number of reasons to be optimistic. There will be more cars to choose from, from a wider range of manufacturers, technology will continue to advance, and even better lease options will become available.

More vehicles from more manufacturers

More manufacturers are entering the Australian market, putting a broader range of models on offer. The influx of different makes and models is expected to drive down prices, making EVs more affordable for everyday consumers. Different makers will also drive improvements in comfort, safety, and efficiency, ensuring a healthy and competitive market.

Technological advancements

Advancements in EV technology are moving along at a swift rate, shaping the future of electric vehicles in Australia. These developments include longer lasting batteries, faster charging times, self-driving vehicles and a range of incredible safety features. Features like these mean a better experience for Australian consumers, whether you are leasing or buying your new EV.

Excellent lease options

Leasing an electric vehicle is becoming an increasingly popular option for Australians who want to drive the latest models without the upfront costs. At CarBon, we have a variety of flexible lease packages available, ensuring that you can access brand new electric vehicles at incredibly competitive rates. Crunch the numbers today with CarBon’s handy novated lease calculator.

Take advantage of the EV boom with CarBon leasing

The electric vehicle revolution is in full swing, and there’s never been a better time to join the movement. Government incentives, advanced technology, and the growing popularity of EVs promises that the future of transportation in Australia is electric. And with a novated lease from CarBon Leasing, you can make the switch to an EV in a way that’s both financially smart and hassle-free.

Start your electric journey with us today and experience the future of driving, one charge at a time.

FAQs about the future of electric vehicles

Which country has the highest percentage of electric cars?

Norway has the highest percentage of electric cars, with over 94.3% of new car sales in August 2024 being electric. This is due to generous government incentives, widespread charging infrastructure, and a strong focus on sustainability. They also boast more electric cars on the roads than petrol or gas cars, an enormous achievement.

Will electric cars save the planet?

That’s a big question, and while it’s tough to give an answer, there’s no doubt they are contributing to a cleaner planet. Electric cars help reduce greenhouse gas emissions and air pollution, especially when powered by renewable energy. However, their overall environmental benefit depends on clean energy use, battery production, and disposal methods.

Are Australians buying many electric cars?

Electric vehicle sales are growing in Australia, with EVs making up around 8% of new car sales in 2023. While this is much lower than countries like Norway, for instance, EVs are gradually gaining ground across the country, with 2024 sales expected to exceed the target of 100,000.

Is there a downside to electric cars?

Electric cars can come with some downsides, such as high upfront costs, limited access to charging stations in rural areas, and some environmental concerns over battery production. However, development has been focused on solving some of these problems, and the benefits far outweigh the negatives.

If you’re looking for a new car, chances are you’re thinking about buying it outright or taking out a loan. However, leasing presents a great option and holds the edge of purchasing outright in a number of ways. In this article, we’ll take a look at the pros and cons of leasing vs buying a car.

Understanding how a novated lease works

It’s essential to understand how a novated lease actually works before deciding whether it’s a good fit for you, the vehicle you’d like, and your situation.

A novated lease is an agreement between you (the employee), your employer, and a leasing company (CarBon). The agreement involves you acquiring a vehicle, and making payments for that vehicle directly from your salary, before it is taxed. This can mean less taxable income each year for you, which can lead to a better result at tax time.

Do remember though, that you don’t actually own the car outright until you’ve made the final payment. This is called the balloon payment or residual amount. 

The benefits of leasing a car

Leasing a car instead of buying it outright comes with a number of great benefits. 

Enjoy a new EV every few years

One of the biggest benefits of a novated lease vs outright purchase is being able to drive a new car or vehicle every few years if you choose. This is especially appealing if you enjoy the latest EV technology, safety features, and the appeal of a new ride. It’s also a great benefit for rideshare drivers, who require a new vehicle every few years for business purposes.

Low monthly repayments

Leasing usually means lower monthly repayments when compared to taking out a car loan, as well as avoiding interest on the value of the loan. Paying less each month means more cash freed up in your budget for other expenses, which is a great benefit if you’re trying to tighten up your budget.

Great tax benefits

Choosing a novated lease over an outright purchase (or car loan) can mean significant tax advantages. The payments for your lease will be taken from your pre-tax income, thereby lowering the amount of income that is taxed at the end of the year. The government also provides additional tax incentives for people who choose to lease an electric vehicle.

Little to no upfront costs

One of the most decisive advantages of leasing a car vs buying is that a novated lease comes with minimal upfront costs. Buying usually requires at least a sizable deposit or down payment, while most leases will have little to no down payment required. That makes a new EV much more accessible, and easier to obtain for people who might not have the capital to buy at that moment.

The positives of buying a car

It’s important to weigh up the positives of both sides when it comes to leasing a car vs buying a car. Below are some of the pros of buying upfront.

You own the car right away

Probably the biggest plus of buying a car is that you own it outright, as soon as you’ve made payment. This means the vehicle is entirely yours, and you can do whatever you want with it, including selling it whenever you like! Owning the car outright can give you peace of mind.

You can customise your car

Owning the car outright means you can customise it however you like. That includes upgrading your sound system, adding new rims or tires, changing the colour of your paint, adding a spoiler, and much more. If you plan to make changes to your car, buying outright is a must.

So, should you buy or lease your next car?

Deciding on whether to buy or lease your new car comes down to a few factors. Ultimately, the best outcome for you will depend on your financial situation, and what you’d like to do with the vehicle. However, it’s clear that novated leasing offers serious benefits over buying a car outright. At CarBon, we’re here to help with all things EV leasing.

Get in touch with us and find out more today.

FAQs about leasing vs buying a car

A few common queries about leasing a car vs buying.

Can you get a novated lease without an employer?

Usually, you won’t be eligible for a novated lease without an employer. This is because the lease agreement depends on the employer making the payments for you from your pre-tax income. However, there may be some cases where you can lease your EV without a traditional employer agreement. Contact our team to find out more.

Does a novated lease affect your credit score?

Taking out a novated lease won’t affect your credit score. However, if you miss payments or default on the lease, it might negatively impact your credit rating. The good news is that all of that is handled by your employer, so it’s not something you’ll need to worry about!

Do you own the car after a novated lease?

You won’t actually own the car outright once your lease finishes, unless you pay the residual value (balloon payment), sell the car which CarBon can help you with or refinance the car if you want to keep it. . The leasing company will retain ownership of the car until that amount is paid. Find out more about residual value here.

As electric vehicles (EVs) become more popular in Australia, many are exploring the financial benefits of novated leases, especially when it comes to salary sacrificing an electric car. But is it truly worth it? Let’s delve into the advantages and considerations of EV leasing, with a particular focus on the services offered by Carbon Leasing, a leading lease provider in Australia. 

What is Salary Sacrificing? 

Salary sacrificing, also known as salary packaging, is a financial arrangement where you agree to forgo part of your pre-tax salary in exchange for benefits of similar value. One popular benefit is a novated lease, which allows employees to lease a car using their pre-tax income, reducing their taxable income and potentially leading to significant tax savings. 

The Benefits of Salary Sacrificing an Electric Car 

1. Tax Savings

   – Pre-Tax Payments: By using pre-tax income for lease payments, you reduce your taxable income, which can significantly lower your tax liabilities. 

   – GST Benefits: In many cases, the GST on the purchase price of the vehicle can be claimed by the employer, which is then passed on as a saving to the employee. 

2. Cost Efficiency

   – Bundled Costs: Novated leases typically bundle all car-related expenses (including registration, insurance, maintenance, and fuel) into one monthly payment, simplifying financial management. 

   – Lower Operational Costs: Electric vehicles generally have lower running costs compared to petrol or diesel vehicles, including lower fuel costs (electricity vs. fuel) and reduced maintenance costs due to fewer moving parts. 

3. Environmental Benefits

   – Reduced Emissions: Driving an electric vehicle significantly reduces your carbon footprint, contributing to a cleaner environment. 

   – Support for Green Technology: Salary sacrificing an electric car supports the adoption and development of green technologies. 

Why Choose Carbon Leasing? 

Carbon Leasing is a leading lease provider in Australia, specialising in EV leasing and salary packaging solutions. Here’s why we stand out: 

– Expertise in EV Leasing: Carbon Leasing offers tailored solutions for electric vehicle leasing in Australia, ensuring you get the best deal suited to your needs. 

– Competitive Rates: They provide some of the most competitive rates in the market, ensuring you maximise your savings. 

– Comprehensive Service: From initial consultations to lease agreements and vehicle delivery, Carbon Leasing offers a seamless and hassle-free experience. 

Novated Leasing a Tesla with Carbon Leasing 

One of the most popular choices for EV enthusiasts is Tesla. Tesla leasing through Carbon Leasing can be particularly advantageous due to the high residual value of Tesla vehicles, which can further reduce your lease payments. 

– Flexible Lease Terms: Choose from a variety of lease terms to suit your financial situation and preferences. 

– Online Free Calculator: Use Carbon Leasing’s online calculator to get an instant estimate of your monthly costs and potential savings. 

Considerations and Potential Downsides 

While there are numerous benefits to salary sacrificing an electric car, it’s also important to consider potential downsides. This is why choosing the right provider is so important. 

Some things to watch out for with other providers: 

– Hard to read quotes – you should be able to understand how much you are paying for by simply looking at the quote. 

– No interest rate – if the interest rate isn’t listed anywhere on the quote that is a massive red flag. If your interest rate is too good to be true, we can guarantee you it is. Those low interest rates are generally loaded with nasty fees.  

– What is your brokerage and establishment fee? – be careful with how these are listed in your quote. They can be buried under a million-line items that are designed to confuse you.  

– Check the maintenance packages – some providers will bundle expensive and unnecessary maintenance packages that will drive up the cost overall.  

– Check for hidden charges in the amount financed – we don’t make customers finance things they don’t need but other providers do. We also don’t try and sell you junk insurance buried into our quotes. 

With Carbon Leasing, a top-notch lease provider, you can enjoy a seamless and cost-effective experience, making it easier than ever to drive an electric vehicle in Australia. Whether you’re considering Tesla leasing or exploring other EV options, salary packaging in Australia provides a practical and financially savvy route to driving a green, efficient vehicle. 

Looking to buy an EV but don’t want to purchase it outright? There are a number of finance options available, including personal loans. However, a novated lease is a less-known, but better option for a number of reasons. But what exactly is it?

A novated lease is an agreement between an employee and their employer. It’s a type of salary packaging that lets you finance a car, whether that’s brand new, used, or even a vehicle that you already own. There’s no doubt that a novated lease for an EV comes with plenty of benefits for the lessee.

Let’s take a closer look.

 

How does a novated lease work?

A novated lease is quite straightforward in terms of how it works. We’ll do all the heavy lifting and all of the finances will be handled by your employer.

Setting up your lease

The first step is to choose the car you want. Once you’ve picked your ride, an agreement will be set up between you, your employer, and the leasing company (in this case that’s CarBon). This means the vehicle will be leased under your name, while the financial side of things is looked after by your employer.

Making payments

One of the best things about this type of lease is stress-free payments. You won’t have to lift a finger, as money will be deducted from your salary each time you get paid (before tax) to cover the ongoing cost of the lease. 

The duration of the lease

You can decide how long you’d prefer the lease agreement to last. An average novated lease might last between three and five years. You can decide how long the lease should last, which is perfect for planning payments around your financial situation and goals!

Here’s an example of a novated lease agreement

Bobby is an employee at Smith Enterprises. He’d like to buy a new EV, and thinks that some kind of lease agreement could benefit him at tax time. He chooses a Tesla Model 3, and enters into a 4 year novated lease agreement between himself, Smith Enterprises, and CarBon. Bobby’s lease payments add up to $1,000 each month, including power costs for charging.

The payments for his car are deducted from Bobby’s salary before tax. Over the course of the year $12,000 is taken from Bobby’s annual pre-tax salary of $100,000. Therefore, his taxable income is reduced to $88,000. Bobby loves the stress-free payments, as well as the fact he’s having a positive impact on the environment!

Things to think about when it comes to a novated lease

There are a few things to keep in mind if you do choose this kind of agreement. For instance, if you change employers while your lease is still running, it can have an impact on the agreement itself. You may need to renegotiate the novated car lease with your new employer, or discuss the situation with CarBon.

EV novated leasing with CarBon

At CarBon, we offer excellent novated lease terms for electric vehicles. We’re here to make the process as smooth as possible, so that you can save thousands of dollars on tax. Contact our team today to find out how you can benefit.

FAQs about novated leasing

Do I own the car at the end of a novated lease?

At the end of the lease, you’ll have a few different options. You won’t automatically own the vehicle once the lease is finished, but you may be able to purchase the vehicle, or choose to extend the lease. If you decide to, you might even be able to return the vehicle.

Can I sell a car under a novated lease?

No, you are not allowed to sell a car that’s still under a novated lease. This is because legally, the car is not yours to sell until the lease period ends and you choose to purchase the vehicle.

Do you pay for fuel/electricity with a novated lease?

You can choose whether or not fuel/electricity is included in your lease agreement. At CarBon we always include fuel/electricity in your quotes but it depends on what provider you choose to go with. If it is, it means that the pre-tax deductions from your salary will include a fuel allowance. Otherwise, you will need to purchase fuel/electricity as normal.

Is an EV novated lease good for tax?

Yes, there are significant tax benefits to a novated lease for an EV. This is because the payments that cover the vehicle and other extras are coming out of your pre-tax income, which at the end of the financial year, can mean less tax paid! You might even be eligible to avoid fringe benefits tax, because you’ll be driving an electric vehicle.

What is a balloon payment?

The amount of money that is due at the end of a lease agreement or a loan is called the balloon payment. Sometimes, you can elect to pay a larger amount at the end of the lease so that your initial monthly payments are lower.

What is the residual value on a novated lease?

The residual value is the estimated value of your EV at the end of your novated lease agreement. This is the amount that you’ll need to pay to own the car outright once you’ve made your final lease payment.

Leasing a Tesla in Australia: Costs, Benefits, and FAQs 

As electric vehicles (EVs) gain popularity worldwide, Tesla remains at the forefront of the EV revolution. For many Australians, novated leasing a Tesla is an attractive option, offering access to cutting-edge technology while enjoying significant financial benefits. But how much does it really cost to novated lease a Tesla? Is it worth salary sacrificing an electric car? Let’s dive into these questions and explore the ins and outs of Tesla novated leasing in Australia with Carbon Leasing, a leading novated lease provider in the industry. 

How Much Does It Really Cost to Novated Lease a Tesla? 

The cost of novated leasing a Tesla can vary significantly based on the model, lease term, and additional services included in the lease agreement. On average, the monthly cost might range from $1,200 to $1,800. This cost typically includes vehicle registration, insurance, maintenance, and sometimes even charging infrastructure. 

Using Carbon Leasing’s online free calculator, potential lessees can get an instant estimate of the monthly costs and potential savings. The significant advantage of novated leasing over traditional car loans is the tax benefit. By using pre-tax income for the lease payments, you effectively reduce your taxable income, leading to substantial tax savings. 

Is It Worth Salary Sacrificing an Electric Car? 

Salary sacrificing, also known as novated leasing, can be an excellent option for leasing a Tesla. It allows you to pay for the lease using pre-tax income, which can lead to significant tax savings. For many, this makes the overall cost of leasing a Tesla more affordable than traditional financing options. 

The benefits of salary packaging a Tesla include: 

– Tax Savings: By using pre-tax income, you reduce your taxable income, resulting in lower tax liabilities. 

– Convenience: All car-related expenses are bundled into a single payment, simplifying budget management. 

– Access to Premium Vehicles: Salary sacrificing enables employees to afford higher-end models like Tesla. 

Can You Lease a Tesla for 5 Years? 

Yes, you can novated lease a Tesla for 5 years. Lease terms typically range from 1 to 5 years, providing flexibility to choose a term that best suits your financial situation and preferences. A longer lease term can lead to lower monthly payments, making it easier to manage your budget. Carbon Leasing offers tailored leasing options to fit various needs, ensuring you get the best deal possible. 

Can You Salary Sacrifice a Tesla? 

Absolutely, you can salary sacrifice a Tesla in Australia. This arrangement, facilitated by a novated lease, allows you to use your pre-tax income to cover the lease payments. Carbon Leasing specialises in EV novated leasing and offers tailored salary packaging solutions for Tesla models, making it simpler and more cost-effective to drive an electric vehicle. 

How Hard Is It to Get a Tesla Novated Lease? 

Obtaining a Tesla novated lease is relatively straightforward, especially when working with a reputable lease provider like Carbon Leasing. The process typically involves: 

1. Eligibility Check: Ensuring you meet the basic requirements for a lease, such as stable employment and income.
2. Vehicle Selection: Choosing the Tesla model that suits your needs and budget.
3. Lease Agreement: Signing the lease agreement and receiving your Tesla.

Carbon Leasing & Rentals simplifies this process by offering expert guidance and support at every step, ensuring a smooth and hassle-free experience. 

Should I Novated Lease a Tesla in Australia? 

Novating a Tesla in Australia offers numerous financial advantages. Here are a few reasons why novated leasing a Tesla could be a smart choice: 

– Lower Upfront Costs: Novated leasing typically requires a lower initial payment compared to purchasing a vehicle outright. 

– Tax Benefits: Salary packaging in Australia allows you to leverage pre-tax income for lease payments, reducing your overall tax burden. 

– Access to the Latest Technology: Novated leasing enables you to drive a state-of-the-art Tesla without committing to long-term ownership, allowing you to upgrade to newer models as they become available. 

– Reduced Financial Risk: Novated leasing mitigates the risks associated with vehicle depreciation and resale value. 

Novated leasing a Tesla through Carbon Leasing offers a cost-effective and flexible way to enjoy the benefits of an electric vehicle. With the added advantages of salary packaging and the simplicity of an online free calculator, it’s easier than ever to make an informed decision. Whether you’re considering a Tesla Model 3 or a Tesla Model Y novated leasing provides a practical and financially savvy route to driving one of the world’s leading electric vehicles. 

Navigating the world of car financing can be complex, especially when considering options like novated leases. But what exactly is a novated lease, and is it worth it? This blog post aims to demystify the concept, explain how it works, and weigh the pros and cons, particularly in the context of Australian tax and employment laws. 

How Does a Novated Lease Work? 

The process of setting up a novated lease involves several steps: 

1. Choose a Car: The employee selects a car they wish to lease.
2. Lease Agreement: A lease agreement is signed between the employee and a leasing company.
3. Novation Agreement: The employer agrees to take on the lease payments as a salary sacrifice from the employee’s pre-tax income.
4. Bundled Costs: Typically, the lease includes all running costs such as maintenance, insurance, and registration, bundled into one monthly payment.

How Does a Novated Lease Work in Australia? 

In Australia, novated leases are a popular option due to the country’s specific tax advantages for salary packaging. The lease payments are deducted from the employee’s gross salary, reducing the overall taxable income and leading to tax savings. Additionally, the Goods and Services Tax (GST) on the car purchase price can often be claimed back by the employer, which is then passed on as a saving to the employee. 

Do You Own the Car After a Novated Lease? 

At the end of the lease term, you have several options: 

1. Purchase the Car: You can buy the car for its residual value.
2. Extend the Lease: You may choose to extend the lease for a further term.
3. Return the Car: Simply return the car to the leasing company and walk away.

How Much of a Novated Lease is Tax-Free? 

The amount of tax savings depends on your income and the value of the lease payments. Using a novated lease calculator can provide a detailed estimate of your potential tax savings, helping you make an informed decision. 

Is a Novated Lease Better Than Paying Cash? 

This depends on your financial situation. While paying cash avoids interest and financing fees, a novated lease can offer significant tax benefits that might outweigh the costs associated with leasing. It’s essential to compare both options and consider factors like cash flow, tax benefits, and your long-term financial goals. 

 How Does a Novated Lease Pay for Electricity? 

For electric vehicles, some novated lease packages include provisions for electricity costs. This can be bundled into your monthly lease payments, making it even easier to manage the expenses associated with running an electric vehicle. 

 How Do I Ask My Employer for a Novated Lease? 

To ask your employer for a novated lease, you should: 

1. Research: Gather information on how novated leases work and the benefits they offer.
2. Prepare: Have a proposal ready outlining how a novated lease can be beneficial to both you and the employer. CarBon Leasing can help you with this, in fact we can speak to your HR/Finance department on your behalf!
3. Schedule a Meeting: Request a meeting with your HR or finance department to discuss the possibility. CarBon Leasing can request the meeting on your behalf, all you will have to do is provide us with the relevant information regarding your organisation.

Can I Transfer a Novated Lease Between Employers? 

Yes, you can transfer a novated lease between employers, but it requires the new employer to agree to take over the lease payments. This process is known as re-novation and involves signing a new novation agreement with the new employer. 

Is the Employer Liable for a Novated Lease? 

The employer is responsible for making the lease payments on behalf of the employee as part of the salary packaging arrangement. However, the financial liability ultimately rests with the employee. 

Can an Employer Claim GST on a Novated Lease? 

Yes, employers can claim the GST on the lease payments and running costs associated with the novated lease, which can then be passed on as a saving to the employee. 

Novated leases offer a compelling way to finance a vehicle, particularly for those looking to reduce their taxable income and streamline car-related expenses. While there are potential downsides it is always best to avoid unscrupulous providers. You can read our guide to avoiding dodgy novated providers here. The benefits—especially the tax savings—often make it a worthwhile consideration. Always consult with a financial advisor to understand how a novated lease fits into your specific financial situation and goals. 

Try our online calculator and get a free quote!

Is a Novated Lease Worth It for High-Income Earners? 

As high-income earners seek to optimise their financial strategies, novated leasing emerges as a compelling option, especially for those eyeing the latest electric vehicles (EVs). But is a novated lease worth it for high-income earners? Let’s delve into the benefits and considerations of novated leasing, particularly in the context of electric vehicles in Australia. 

Understanding Novated Leasing 

What is a novated lease? In simple terms, a novated lease is a three-way agreement between an employer, an employee, and a finance company. It allows employees to lease a vehicle using their pre-tax salary, which can result in significant tax savings. This arrangement, known as salary packaging, bundles vehicle-related expenses such as registration, insurance, and maintenance into one manageable payment. 

The Financial Benefits for High-Income Earners 

Tax Savings: One of the most significant advantages of novated leasing is the potential for tax savings. By using pre-tax dollars to pay for the lease, high-income earners can reduce their taxable income, leading to substantial tax benefits. This can make a novated lease a financially savvy choice, particularly for those in higher tax brackets. 

Cost Efficiency: With all vehicle-related expenses included in the lease payments, high-income earners can enjoy the convenience of predictable, all-inclusive payments. This cost efficiency can simplify budgeting and reduce the financial burden of unexpected vehicle expenses. 

 Access to Premium Vehicles: Novated leasing provides an opportunity to drive high-end vehicles in a more cost effective way. For instance, a BMW novated lease or a Mercedes-Benz novated lease allows high-income earners to enjoy the benefits of the latest electric vehicles without the hefty upfront cost. 

The Appeal of Electric Vehicles (EVs) 

Environmental Impact: Electric vehicles are an attractive option for those looking to reduce their carbon footprint. With the growing focus on sustainability, an EV novated lease aligns with the values of environmentally conscious high-income earners. 

Government Incentives: In Australia, there are various incentives and rebates available for electric vehicles across the states, making an EV novated lease even more appealing. The biggest is government incentive is no FBT on EVs under the Luxury Car Tax threshold. These incentives can further reduce the overall cost of leasing an electric car. 

Lower Operating Costs: Electric vehicles typically have lower operating costs compared to traditional petrol or diesel cars. Reduced fuel costs and lower maintenance expenses can make a significant difference over the lease term, adding to the financial benefits of a novated lease. 

Using the Novated Leasing Calculator 

To determine if a novated lease is worth it, high-income earners can use a novated leasing calculator. This tool provides a clear picture of the potential savings and costs associated with a novated lease. By inputting details such as salary, vehicle choice, and lease term, users can get an accurate estimate of their financial benefits. 

Practical Considerations 

Flexibility: Novated leasing offers flexibility in terms of vehicle choice and lease terms. High-income earners can select from a wide range of vehicles, including the latest electric models. Lease terms can be tailored to suit individual needs, typically ranging from one to five years. 

Nationwide Availability: Novated leasing is available across Australia, with providers like Carbon Leasing & Rentals offering services in major cities including Perth, Melbourne, Brisbane, Adelaide, Sydney & Canberra. This accessibility ensures that high-income earners can take advantage of novated leasing regardless of their location. 

 Is Novated Leasing Worth It? 

For high-income earners, a novated lease can be a highly beneficial financial strategy. The combination of tax savings, cost efficiency, and access to premium electric vehicles makes novated leasing an attractive option. By using tools like the novated leasing calculator and exploring options from reputable providers such as Carbon Leasing & Rentals, high-income earners can make informed decisions that align with their financial goals and lifestyle preferences. 

In conclusion, a novated lease is worth considering for high-income earners, especially those interested in electric vehicles. The financial advantages, environmental benefits, and flexibility of novated leasing make it a compelling choice. By leveraging the benefits of novated leasing in Australia, high-income earners can drive their dream electric car while optimizing their financial strategy. 

Luxury Car Tax (LCT) and Luxury Car Adjustment (LCA): 

The LCT and LCA are separate amounts.  

Luxury Car Tax (LCT) – There is no LCT included in the purchase of your vehicle and falls under the threshold therefore your vehicle is eligible for the FBT exemption 

What is it? A federal tax levied on cars with a value exceeding a certain threshold. The threshold varies depending on the car’s fuel efficiency. 

Who pays for it? The consumer purchasing the luxury car pays this tax at the point of sale. 

What is its purpose? Primarily a revenue-raising measure for the government. 

What is the threshold?  For the financial year 2024-25, the LCT threshold for fuel-efficient vehicles is $91,387.00 

For all other luxury vehicles, the threshold is $80,567. 

Luxury Car Adjustment (LCA) 

What is it? A calculation used in novated leasing arrangements when the value of a car exceeds the luxury car depreciation limit (currently $69,674 for the 2024 financial year). 

Who it affects? Employers who offer novated leases on luxury cars. 

What is its purpose? To compensate employers for the reduced tax deductions they can claim on luxury cars. Because employers can only claim deductions up to the depreciation limit, the LCA ensures they are not financially disadvantaged. 

How does it work? The LCA is typically calculated for the full lease term and spread evenly over the lease period. 

Whether you’re considering a Tesla novated lease, a BMW novated lease, or exploring other electric vehicle options, a novated lease could be the key to combining luxury and sustainability in your driving experience. And for those with a taste for high-end models, consider leasing premium vehicles like the BMW iX1, BMW iX3, Kia EV9, Mercedes-Benz EQB 250 or other higher-priced options through CarBon Leasing & Rentals, ensuring you drive in style and comfort while enjoying the benefits of electric vehicle leasing in Australia. 

Try our online calculator and get a free quote.