What is a Novated Lease?
When you mention ‘Novated Leasing’, sometimes people may look at you with a blank stare, as they generally have no idea what it is.
In reality, it is simple to explain, and the benefits to you could mean more money in your pocket.
Novated Leasing is a salary packaging arrangement between you (the employee), your company (the employer) and a finance company.
Steps involved to getting a novated lease
Choose A Car
The first step is to choose the car you want, go and test drive some vehicles and see what works for you.
Contact Carbon
Speak to a novated leasing consultant who can give you an official quote on the vehicles you are interested in and answer any questions you may have. The consultant also checks to see if your employer is ok with you getting a novated lease.
Apply for Finance
Once you’ve picked your vehicle your leasing company helps you apply for finance.
Finance Approved
Once your finance is approved the leasing company should organise a vehicle pickup date from the dealership.
Pick Up Your Car
Final step is picking up your new car. The leasing company will setup your novated lease and your employer will deduct payments from your pre-tax salary and send them to the leasing company.
Here’s an example of a novated lease agreement
Craig is an employee at Smith Enterprises. He’d like to buy a new EV and thinks that some kind of novated 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. Craig’s lease payments add up to $1,000 each month, including power costs for charging.
The payments for his car are deducted from Craig’s salary before tax. Over the course of the year $12,000 is taken from Craig’s annual pre-tax salary of $100,000. Therefore, his taxable income is reduced to $88,000. Craig loves the stress-free payments, as well as the fact that the doesn’t need to go to a petrol station anymore!
