What’s a novated lease and is it worth it?

Imagine zipping around in your dream car while saving thousands of bucks every year. With a novated lease you could do just that. It’s a super savvy way of financing a new or used car while making the most of some nifty tax incentives.

And thanks to Oly, it’s now easier than ever and available to everybody, not just those working for big companies with leasing arrangements in place. So, whether you’re a tradie, accountant, real estate agent or just all-round legend – the road to novated leasing is now traffic-free and wide-open!

4:15 minute read

Published on March 14, 2024

The benefits of a novated lease for small to medium business

Key takeaways

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A novated lease is a tax savvy way to finance a car because it lets you pay using part of your before-tax salary, which could reduce your taxable income.

With an Oly novated lease, there's no upfront deposit or GST on your new car - and just one nifty regular payment covering all your car expenses.

Novated leasing is a three-way deal between you, your employer, and a financier. You pick your dream car, and a leasing provider (like Oly) handles the rest.

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So… what is a novated lease?

With a novated lease, you pay for a new or used car using a mix of your pre- and post-tax salary. It’s a neat little thing called 'salary sacrificing', which is also 'salary smart' because it could save you thousands of dollars each year. Plus, novated leasing bundles all your car stuff – fuel, rego, servicing… everything – into one tidy regular payment making things super convenient.

Is a novated lease a good idea?

If you're after a wallet-friendly way to have a car and save on tax, a novated lease could be a GREAT idea! It means no upfront costs, less bill-juggling, and no upfront GST on your new ride… Tick! Tick! Tick!

How does a novated lease work?

Novated leasing is a three-way agreement between you, your employer, and a financier that a novated leasing company (like Oly) organises. You choose your dream car, and your novated leasing company (hopefully Oly) gets it for you. Then your employer pays for your car and running costs using a mix of your pre- and post-tax salary.

It's a smart, budget-friendly way to drive the car you want. And you could pay less tax with the backing of your employer and novated leasing company (…Oly 😊).

How does a novated lease save tax?

There’s a heap of ways you could save tax with a novated lease. For starters:

You could pay less tax as your car is salary sacrificed using pre-tax dollars.
Your employer can claim back the GST on running costs as an input tax credit and they may choose to refund that amount to you.

And if you’re keen to hit the road without hefty fuel costs, it’s now cheaper than ever to get an electric car thanks to the government’s Electric Vehicle (EV) Discount. For cars valued under $91,387 (from July 1, 2024), you can pay for your EV from 100% pre-tax salary – so leasing a $60k Tesla 3 could cost you a similar amount each week as a $39k petrol car.^

What makes Oly different?

Novated leasing was typically only available to employees of big honcho organisations with a leasing arrangement in place. Oly brings novated leasing to employees of all companies, no matter how small.

Plus, Oly is backed by one of Australia’s largest and most trusted novated leasing providers, McMillan Shakespeare Group (MMS). So, you benefit from bigger buying power and over 35 years of experience to get a great deal on cars.

You also get:

Local support – Oly is Aussie-owned and operated, so you won’t be lobbed offshore over some distant, crackling phone line when you reach out for help.

More free time for you – Oly takes care of all the boring paperwork, hunting down your dream car, sorting the money, and keeping your ride in tip-top shape.

The full picture – through the Oly app you have all your lease info on tap. View all your transactions, track your budgets and submit claims at any point over the course of your lease. Sweet!

No more scary bills – one easy payment covers your car and all its expenses – that means no surprise rego letters!

Who owns the car under a novated lease?

With a novated lease, the car is owned by the finance company, but you get to use it as if it's your own. It's a cool arrangement because it's like having your own car without the hassle of ownership (plus, you could access some pretty cool tax benefits!).

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

That is absolutely possible! Once your novated lease is up, you have the option to keep your car by making a final payment for the residual value of the car at the end of the lease. It's a great way to own the car you've grown so fond of.

How can I get started with Oly?

You can get cracking with an Oly novated lease in four quick and easy steps:

Step one - Get a quote.

Share a bit about yourself with Oly and find out how much you can spend on your dream car.

Step two - Oly gets your boss on board.

Oly shoots your employer an email with some super-easy steps they can follow to get your novated lease set up.

Step three -Wait for approval.

Oly’s speedy approval could be yours in hours!

Step four -Drive.

Hear that? The open road is singing your name…

Keen to put the pedal down and rev up the savings on your next car?

Get your quote with Oly now

Disclaimer

^ Displayed price is only available through a novated lease administered by Oly. Estimated costs have been determined based on the following assumptions: 1) The example assumes that the car is an eligible zero or low emissions vehicle, 2) The lease is a Oly fully maintained lease, 3) A 5-year lease term, 4) A residual value of 28.13% of the vehicle purchase price payable at the end of term, 5) Gross annual salary of $90,000, 6) An annual distance travelled of 15,000kms, 7) The value of the car at the first retail sale was below the luxury car tax threshold of $91,387 for fuel efficient vehicles, 8) The car is first held and used on or after 1 July 2022 and 9) The vehicle is purchased in NSW. Additionally, the estimated annual operating costs includes estimates of fuel/electricity, maintenance, four replacement tyres, registration, CTP and comprehensive insurance, roadside assistance, and fleet management fee have been calculated on a GST exclusive basis on the assumption that your employer will be entitled to GST input tax credits and that they will pass on the benefit to you. GST is payable on your ECM contributions. State Stamp Duty rates apply. PAYG tax rates effective 1 July 2024 have been used. The indicative price quoted for the novated lease is based on vehicle quotations received on 1 June 2024 and does not include any optional extras. Any optional extras that you choose will affect the cost of the novated lease and residual value. The novated lease offer is based on the assumption outlined in the comparison table and is an indicative cost approximation of the selected vehicle and model stated and the amounts may change at the time the novated lease quotation is completed and finalised. Your individual circumstances have not been taken into account as this will affect the overall weekly cost amount and the benefits of a novated lease. Savings shown are indicative and reflect estimated tax savings over the full-term of the lease. The total amount saved is a comparison between a novated lease based on the assumption outlined above and the purchase of a vehicle and payment of running and maintenance costs using post-tax earnings. Actual savings will depend on personal circumstances and may vary depending on the vehicle model and price. Oly recommends that you seek independent financial and taxation advice.

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