Novated leasing can be genuinely efficient, and it can also quietly cost more than buying outright. The difference sits in the detail of the quote.
How the structure works
A novated lease is a three-way agreement between you, your employer and a financier. Your employer deducts the lease and running costs from your salary and pays them on your behalf.
Because part of that deduction comes from pre-tax income, the effective cost of running the vehicle can fall meaningfully depending on your marginal rate.
Employee Contribution Method
FBT applies to a vehicle available for private use. The common solution is to contribute part of the cost from post-tax salary, reducing the taxable value to nil.
This is why a quote shows both pre-tax and post-tax components. Understanding the split is essential to comparing packagers honestly.
The electric vehicle exemption
Eligible battery electric vehicles below the luxury car tax threshold for fuel-efficient vehicles can attract an FBT exemption, removing the post-tax contribution entirely.
That single change makes novated leasing dramatically more attractive on eligible EVs than on comparable petrol models. Eligibility rules do shift, so confirm current settings before committing.
What to check in every quote
Examine the interest rate, the residual value, budgeted running costs, packager fees and the vehicle purchase price the lease is written against.
An inflated purchase price is the most common issue we find. We source and price the vehicle independently, then let the packager finance it, which keeps both sides honest.