Login

Is a novated lease worth it?

Make an informed decision today.

What is a novated lease?

Novated leasing is an ATO-approved benefit in which all the costs for running a car are taken directly out of your salary, through a combination of pre and post tax deductions by your employer.

The tax savings associated with a novated lease and ease of budget management make it an appealing option for many working Australians.

Save up to 15% on your car with a novated lease

Below is an example demonstrating how leasing a Tesla Model Y over 60 months can be more cost-effective compared to purchasing it outright.

Buying with cash

$95,704

Zero tax savings

Full GST is usually applicable, and running costs are paid from post-tax income.

Higher upfront costs

Buying a car outright requires paying for the car in full and potentially saving up for the total vehicle cost.

Market rates apply

Fleet pricing is not available when you buy a car outright. You may have to pay the advertised rates on most occasions.

Novated lease

$81,110

Massive tax savings

Save on GST on the vehicle purchase and reduce running costs by using pre-tax income. By taking out a novated lease you’ll be reducing your total taxable income.

No upfront costs

Lease payments require no upfront payment.

Better deals

A novated lease could give access to exclusive fleet pricing - which can help you pocket massive savings off the driveaway price.

Buying a Tesla Model Y RWD MY 2025 with cash compared to a novated lease over 5 years.

Calculate your savings

What car can I choose with a novated lease?

Novated leasing is an ATO-approved benefit in which all the costs for running a car are taken directly out of your salary, through a combination of pre and post tax deductions by your employer.

New car
Unlock exclusive fleet discounts and massive tax savings with a brand new car.
Share a link to the listing with your Flare Cars leasing consultant. You can read about the process of leasing a used car by following the link below.
Sell and lease back your existing car: You can sell and lease back your own vehicle to take advantage of the tax savings associated with a novated lease.

Electric cars and FBT exemption

What is FBT?

Fringe benefits are extra perks offered to employees in addition to their salary.

They can include benefits like discounted loans, childcare fee reimbursements and novated car leases. These benefits are offered as part of your salary package.

These perks are subject to Fringe Benefits Tax (FBT), as regulated by the ATO. FBT applies even if the benefit is provided by a third party and is separate to income tax as it is calculated on the taxable value of the fringe benefit.

Advantages of going electric

Electric vehicles are a popular choice when considering a novated lease as many qualify for an FBT exemption. An eligible electric vehicle must be:

Claiming electricity charging costs on a novated lease

Claim your charging costs through the Flare cars driver portal. The ATO allows two methods of reimbursement.

You cannot use a mix of the two methods and must choose one or the other, depending on your personal circumstances.

Flat, distance baced method

You can make a flat, distance-based claim of 4.2c/km. The flat, distance-based claim depends on the number of kilometers traveled at the time of making the claim.

The true cost-of-charging claim is based on each expense incurred at a supercharger port or from a home electricity bill.

What happens at the end of a novated lease?

Choose between the following three options at the end of your novated lease.

Own the car outright

Pay the car's residual value (usually less than its market value) and own the car.

Sell the car

If you do not wish to own the car, you can sell it tax-free and retain any profits after covering the residual value.

Extend your lease

Extend the current lease for a further term.

How is the residual value of a car calculated?

Novated leasing is an ATO-approved benefit in which all the costs for running a car are taken directly out of your salary, through a combination of pre and post tax deductions by your employer.

Lease term

Percent of original price

Excluding GST

1 year65.63%
2 years56.25%
3 years46.88%
4 years37.5%
5 years28.13%
dog looking out car window

What happens at the end of a novated lease

Change of employment

When deciding to change your job, you may want to ensure your employer is willing to take on your novated lease. Flare can help facilitate this on your behalf.

Residual payment

Depending on the type of car and the lease term, residual payments may vary at the end of the lease period.

Employer dependency

If you are self employed or work as a short-term contractor, you may not be eligible for a novated lease. Flare supports contractors in continued employment within the same industry, and can advise eligibility based on your particular circumstances.

Got questions?

We’ve got answers

According to the ATO a trade-in cannot be used to reduce the leasing costs.

Get started

Contact the
Flare Cars team

Fill in this quick form and we’ll be in touch shortly with a quote.

Terms and conditions

T&Cs go here

Is a novated lease worth it? Make an informed decision today. Calculate savings What is a novated lease? Novated leasing is an ATO-approved benefit in which all the costs for running a car are taken directly out of your salary, through a combination of pre and post tax deductions by your employer. The tax savings […]