A novated lease lets you bundle all of your car finance and running costs into one simple payment, part of which can be deducted from your pre-tax salary. A novated lease is an ATO-approved car finance option that allows you to purchase a car and receive significant tax savings. With a novated lease, SG Fleet buys your car of choice, your employer deducts the lease and running cost payments from your salary, and you drive away in a shiny new car. This allows you to make significant tax savings, in addition to the added convenience of having all your car costs packaged into one simple payment and gaining access to fleet discounts on fuel and servicing.
At SG Fleet, we’ll help you to set a budget up front to cover all of your car’s expenses over the life of your lease. These include:
Your finance payments can be drawn from your pre-tax salary so you can potentially save thousands in tax.
We’ll issue you with an SG Fleet fuel card, so you can enjoy the convenience and savings of using your card to pay for fuel at multiple leading retailers nationwide.
Get access to our fleet discounts and maintenance experts – we'll monitor all work ensuring you’re never over-serviced or over-charged.
When it comes to renewing your registration and insurance, we can pay the expenses directly or reimburse you, whichever suits you best.
Get 24/7 peace of mind with our optional roadside assistance.
We monitor your usage and expenses throughout your lease to keep you on track. Any funds left in your account at the end of your lease are simply returned to you through your employer.
A novated lease is a three-party agreement between you, your employer and SG Fleet. You enter into a finance lease with SG Fleet, and then a second document called a novation agreement is used to transfer some of your lease obligations to your employer. Once the novation agreement is in place, your employer is considered to be leasing the car. This allows your car to be treated as a company car, which provides significant income tax and GST savings to you.
To maintain your novated lease, your employer deducts a regular payment from your salary (this is made up of pre- and post-tax contributions), and then remits this amount to SG Fleet to pay for your car’s running costs. SG Fleet will monitor your driving habits and car expenses to ensure your novated lease budget stays on track. Check to see if you're eligible for a novated lease under your employer’s salary packaging policy.
Under a novated lease, your car’s running costs are paid for with a mixture of pre- and post-tax dollars, reducing your taxable income. This may allow you to make significant income tax savings, increasing your take-home pay.
SG Fleet purchases the car on your behalf excluding GST, meaning under a novated lease you save the GST on the purchase price. You can also save on GST for running costs of the car including fuel, service, maintenance and tyres.
Use SG Fleet's expert Car Buying Service to get better pricing on the new car of your choice, any make, any model, Australia-wide. You can also choose to novate a used car or the car you currently own. You can even novate more than one car, subject to your employer’s salary packaging policy.
With SG Fleet Repair Assist managing all your car’s scheduled servicing, maintenance and repairs your costs will be lower. Our team of repair specialists acts on your behalf to avoid over-servicing and over-charging.
Enjoy the convenience and savings of using your fuel card to pay for fuel at multiple leading retailers nationwide.
We help you budget for all of your car's finance and running expenses over the life of your lease. A set payment is then deducted by your employer each pay cycle to cover these costs.
One of the most compelling benefits of taking out a novated lease is that you can potentially decrease the amount of income tax you pay.
When finance payments and vehicle running costs are deducted from your gross salary, you effectively pay less tax. This means you have more disposable income.
Another great benefit of a novated lease is that you can make GST savings in two key areas:
With a novated lease, you only pay for the GST exclusive amount. This means you can save thousands upfront on the cost of your new car.
Hint: If you’re not taking advantage of our expert Car Buying Service, we recommend you purchase your new or used car through a registered car dealer rather than a private seller. That way, the dealer can issue SG Fleet with a tax invoice, allowing us to claim back the GST on your behalf.
Depending on your employer’s Salary Packaging Policy, you can also save 10% off all your finance repayments and running costs.
How? Well, because a novated lease involves your employer, it allows your personal car, new or used, to be treated like a company car for tax purposes. This means your employer can claim back the GST on your running costs, and you only need to pay for the GST exclusive portion.
For most Australians, a car is the second biggest investment you're likely to make. SG Fleet gives you the tools to make an informed decision on how to finance your car.
The final decision to lease or buy can be easily assessed by reviewing the costs of both to see which will best suit your individual situation. Your dedicated SG Fleet consultant will answer any questions and provide you with an individual benefit assessment showing how much you could save with a novated lease.
If you’re eligible through your employer, it’s hard to beat the benefits of a novated lease:
When you take out a novated lease, part of your payments come from your pre-tax salary, so your taxable income is reduced, and you could end up paying less tax throughout the year.
A novated lease also includes your running costs such as fuel, registration and servicing. These are expenses whether you lease or not, so why not use your pre-tax salary to pay for them and reduce your taxable income at the same time.
With a novated lease, you’ll also save the GST on your car’s running costs such as fuel, servicing and maintenance and tyres.
As defined by the Australian Taxation Office (ATO), Fringe Benefits Tax (FBT) is a tax your employer pays on certain benefits they provide to you.
With a novated lease, your employer uses your pre-tax salary to pay for a portion of your novated lease. This effectively reduces your income tax. To offset some of this reduction in your income tax, the ATO levies FBT on the car benefit that has been provided to you.
The amount of annual FBT on a novated lease is generally calculated by multiplying the cost of the car (GST inclusive) by a 20% flat rate, which is determined by the ATO.
A novated lease is tax effective because in most cases, the income tax savings will be greater than the FBT payable on the car.
At SG Fleet, we use the Employee Contribution Method to reduce the amount of FBT owed.
The Employee Contribution Method (ECM) enables you to reduce your FBT liability by making some post-tax contributions towards the operating costs of your vehicle. At SG Fleet, we automatically split your novated lease costs into pre- and post-tax contributions to maximise your tax benefit.
The most tax-effective way to use ECM is to pay enough of your car expenses in post-tax dollars, removing the need to pay any FBT. The post-tax amount required to eliminate your FBT liability is generally 20% of the GST inclusive price of your vehicle every year.
Contact us on 1800 743 262 for further information on how ECM is calculated and how
it may benefit you.
At the end of your lease, you’ll have what’s called a ‘residual value payment’ due. This is the GST inclusive amount owing on your car at this time, which is calculated in accordance with Australian Taxation Office rules.
The residual value is set by the ATO and is usually expressed as a percentage of the amount financed.
Lease Term (Years) ATO Minimum Residual %*
1 65.63%
2 56.25%
3 46.88%
4 37.5%
5 28.13%
We’ll be in touch six months prior to your lease term expiration to discuss your residual value options, which include: