Novated Leasing FAQs

What is a Novated Lease?

A Novated Lease is a way to purchase your vehicle through your employer and access savings on income tax and GST.  A portion of your salary is deducted from each pay to cover the finance and running costs of your car.

Why are my payments made from my pre and post-tax salary?

A Novated Lease is classed as a Fringe Benefit, which means you will be liable for Fringe Benefits Tax. For every dollar that you pay post tax you reduce this liability. We calculate this amount first to make sure you have no liability and then we take the rest of your payment from your pre-tax salary.

Can anyone apply for a Novated Lease? How do I know if I’m eligible?

A Novated Lease is a three way agreement between you, your employer and a finance company. As it is a form of Salary Packaging, your employer must have an agreement with a Salary Packaging organisation like RACV Salary Solutions.

Do I have to use the vehicle for business purposes?

No, the vehicle does not need to be used for business purposes. Novated Leasing is actually designed specifically for employees to purchase the vehicle of their choice.

Find out how much you could save with our Novated Leasing calculator.

Do I have to buy a new vehicle?

With RACV Salary Solutions you have the flexibility to package the best car for your needs, whether that’s a new, used or ex-demo vehicle. You can even package your existing car if it’s less than 8 years old.

Can I package running costs as well as the vehicle?

Yes! With Novated Leasing almost all the costs of buying and running a car are included. For more information visit our What can I include page.

Items that can’t be packaged include road tolls and e-tag expenses, fines and infringement notices and any accessories or modifications fitted to the vehicle after purchase e.g. towbar, roof racks, window tinting etc.

What if I already have a vehicle that I want to trade-in? Will the trade-in reduce the finance amount?

Any trade-in or deposit you make will be refunded back to you by the dealership on delivery of your vehicle, it will not affect the finance amount.

What are the GST savings with a Novated Lease?

Whilst packaging your vehicle with a Novated Lease you will not pay any GST on the vehicle purchase or maintenance costs*. This means you will be exempt from GST for most vehicle running costs for the term of the lease.

*If your employer can claim a refund of GST, your employer can pass this benefit on to you, meaning you can save GST on fuel, insurance and other maintenance costs. Please speak with your leasing consultant to confirm if this applies to your employer.

What happens if I leave my job or go on maternity leave or leave without pay during the lease period?

If for some reason you are no longer being paid a salary by your employer your Novated Leasing packaging arrangement will cease, however you are still responsible for making the loan repayments.

If this occurs there are a number of options available to you:

  • Continue to make the lease repayments and running costs yourself out of your after-tax income;
  • Request a payout figure and finalise the lease with payment in full*;
  • Transfer your lease to a new employer (if the employer allows.)

*A Novated Lease is a commercial finance product where interest is applied upfront and a residual is payable. This can result in a payout figure greater than the value of the vehicle in the event of early lease termination.

What happens at the end of the lease?

Before the end of the lease term you will be contacted by an RACV Salary Solutions customer service team member to discuss your options:

  • Purchase another vehicle: RACV Salary Solutions can help you find a new vehicle and arrange your new budget, taking into consideration any outstanding balance from your previous lease. To finalise your existing lease you will need to pay the residual value by either selling your vehicle privately or trading it in and receiving cash (you cannot use this to negotiate a reduction on the new vehicle’s purchase price.)
  • Lease the same vehicle again: If you are happy with your current vehicle and it is less than 8 years old you can choose to lease it again. This results in a lower finance repayment and lower residual amount at the end of your new lease term.
  • Buy the vehicle outright: You can finalise your lease agreement and buy your vehicle outright by paying the residual value in full.
Can I change my leasing budgets during the term of the lease?

Absolutely! Simply contact RACV Salary Solutions on 1800 680 180 and speak with one of our customer service team.