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Flare Cars

Your novated lease questions, answered

Learn more about Flare Cars and our novated leasing service. 

Got questions?

We’ve got answers

Novated leasing is a salary packaging benefit for financing a new or used car through your employer. If you’re eligible, a novated lease could save you thousands every year by reducing your taxable income when compared with buying and running a car outright.

Arranged as a three-way agreement between you, your employer, and a financier, novated leasing uses a mix of pre- and post-tax income to cover the lease and select ongoing costs. This includes things like fuel, tyres, and insurance, offering upfront savings for you and fewer out-of-pocket expenses as you go.

With a novated lease, certain costs are covered with the pre-tax component of your salary package which can lower your overall tax burden. There are also GST savings on the price of a new or used vehicle—up to the luxury car limit—and on most of your running costs, too. That’s potentially thousands of dollars in savings for you over the life of a lease compared to buying and running a car outright.

When you initiate a lease, you can choose a term between one to five years, as per your needs and budget. After the initial term, you might be eligible for an extension if the vehicle and new lease meet the finance credit requirements.

You’ll be required to pay a residual payment at the end of your lease term, also known as a balloon payment, unless you opt to extend it if possible. The ATO provides guidelines to calculate this amount based on the vehicle cost and lease term. The future value of the car may cover the residual amount due if you decide to sell it.

A Flare Cars novated lease comes in all shapes and sizes. You can lease a new car, most used cars, or even your own car. There are rules and regulations around each type of novated lease, so be sure to read the relevant FAQs below.

It’s as simple as providing a few details. This includes the type of car you’re interested in, your budget, average annual kilometres driven, and your ideal lease term. From there, we’ll put together a quick quotation and have it to you in minutes.

Reach out to our team with the car you’re considering—we’ll put together a quote tailored to your personal circumstances. From there, a leasing consultant will take you through the process, step by step.

Used cars must not exceed 15 years at the end of the lease term and must meet other eligibility requirements. For example, to lease a used car for 5 years, the car must be no older than 10 years at the start of the lease.

Got a used car in mind? Chat with your Flare Cars leasing consultant first. We will need to confirm your credit is approved before you can sign any purchase contracts.

If you own your car outright or owe less on existing finance than the car is worth, you might still be eligible for a lease—and the associated tax savings. We can explore a “sale and leaseback” arrangement. Essentially, the financier buys your vehicle and then leases it back to you over an agreed term, just like a regular novated lease.

Updated legislation means you get the 20% fringe benefits tax (FBT) concession rate benefit regardless of kilometres driven. So, whether it’s 5,000 kilometres or 25,000 kilometres, you could still benefit. The only things distance impacts are your budgets for running costs like fuel, servicing, and so on.

Employee benefits sometimes attract fringe benefit tax (FBT) liabilities. To reduce this liability, whilst maximising your savings, Flare uses a process called the Employee Contribution Method. This method splits some costs into pre- and post-tax deductions, and Flare will work with your payroll department to help set this up on your behalf.

A novated lease lets you cover certain running costs like fuel or EV charging fees, servicing and maintenance, tyres, registration, and insurance (comprehensive and CTP). This also includes a set number of car washes per year.

After-market accessories, upgrades and improvements, or those applied after delivery cannot be claimed as part of your novated lease. Any upgrades or changes you wish to claim must be related to wear and tear or fitted prior to delivery and included on your vehicle invoice.

When arranging your lease, you’ll let Flare know how much you think you’ll drive your car each year. This helps budget your estimated running costs, like fuel, servicing, and tyres. At the start of your lease, Flare will provide you with a fuel and maintenance card, which you can use to pay for these pre-budgeted expenses.

Costs associated with servicing your car are invoiced to Flare directly from the service provider. For other costs not covered by the card, like car washing and EV charging fees, you can submit claims and receipts for reimbursement via the Flare Cars driver portal.

Flare aims to keep your budgets as accurate as possible. However, in the case your expenditure is above the budgeted amounts, Flare will reach out to discuss modifying your deductions to match. If you’re spending below budget, Flare will discuss your options with you, including when you may be able to access the excess amounts.

There are a few options available:

  1. You can delay a claim until your balance is sufficient.
  2. We can schedule a one-off future payroll deduction to cover the whole claim.
  3. We can schedule multiple future deductions to cover the claim.

Just remember, if your balance is below the claim amount, the claim cannot be paid.

When changing employment, it’s important to check if your new employer supports novated leasing. If they do, you can simply transfer your novated lease to their salary packaging provider.

If your new employer does not offer novated leasing, it’s possible to pay your lease costs directly to the financier. However, this could result in the loss of the tax benefits associated with your lease.

In this scenario, Flare might be able to help. Simply reach out to discuss available options, including potentially providing your new employer with the systems required to support your novated lease through Flare.

If your lease is ending, you can choose to:

  1. Pay the residual value and own the car outright.
  2. Sell the car and retain any profits after paying the residual value.
  3. Extend the current lease for a further term and continue enjoying your vehicle.

Commonly, people will sell or trade in the car to cover the residual value and then take out a new lease on another car.

Under a Flare Cars novated lease agreement, you are leasing the vehicle from the applicable finance company. However, you are the registered owner of the car with your relevant government bodies.

This can either be returned to you via your payroll, or we can retain any balance to be used towards your next lease.

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Your novated lease questions, answered Learn more about Flare Cars and our novated leasing service. Got questions? We’ve got answers What is a novated lease? Novated leasing is a salary packaging benefit for financing a new or used car through your employer. If you’re eligible, a novated lease could save you thousands every year by […]