Facts & Fictions

There are some common misconceptions about Novated Leasing:

  • Fiction: Only New vehicles can be packaged
  • FactNewUsed or Existing vehicles can be novated (provided the used/existing vehicles are not too old)

  • Fiction: Only those with high vehicle usage / km’s travelled can benefit
  • Fact: The benefit received is proportional to the expenses incurred (km’s travelled) – ie: the higher the km’s, the higher the expenses (eg: fuel) & therefore the higher the benefit received. Correspondingly, fewer km’s travelled, simply means less expenses to pay from pre-tax salary.

Remember, the focus is simply on paying for your vehicle expenses in a way that costs you less, not on how far you drive!

  • Fiction: I’ll save money if I draw down on my mortgage, rather than financing my vehicle.
  • Fact: There are two considerations: total interest paid & total cost of vehicle expenses(1) The total/cumulative interest paid over time with a mortgage rate (approx 2% lower than lease rates), compared with (2) paying interest over a shorter term with a lease, whilst (3) paying for vehicle expenses from post-tax salary compared with (4) paying for my vehicle expenses predominantly/totally from pre-tax salary will mean that the overall cost of your total vehicle expense will be less as a novated lease (see your accountant for verification).

  • Fiction: I am better of claiming my vehicle via my spouse/partners business (or farm)
  • Fact: Novating a vehicle is effectively a 100% tax deduction (without any need for business usage at all). Further, the GST on the purchase price via a dealer/auction is not paid by you & any surplus received when the vehicle is traded/disposed is not taxable (as confirmed by the ATO ID 2003/320 & CGT Exemptions).

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