Fully Maintained Novated Lease Overview

 
A novated lease is a form of salary packaging where the employee agrees to sacrifice a portion of their salary to finance the purchase of a vehicle. This option has become especially popular throughout Australia as it provides significant income tax and GST savings. Financing a car in this manner allows employees to manage all vehicle financial obligations in monthly payments.

Novated leasing is a three way agreement between the employee, employer, and leasing company whereby the employer agrees to take on the vehicle payments on behalf of the employee. All funds are automatically deducted from the employee’s pre-tax income, thereby reducing taxable income and allowing employees to increase their take home pay.

Benefits for employees include:

  • Significant income tax savings on GST
  • Access to vehicle and insurance discounts
  • Flexibility in the type of car available
  • Complete car management with regular monthly payments
  • Vehicle can be used for work and private use

Benefits for employers include:

  • Cost effective way to operate and manage a fleet of company vehicles
  • Ability to provide affordable transportation for employees
  • Reduced risk as the vehicle becomes the employee’s responsibility at the end of the lease
  • Income tax reduction for payments made on behalf of employees

Types of Novated Leases

There are three main types of novated leases. Which one you choose ultimately depends on your current financial situation as each has their own pros and cons.

  • Novated finance lease: Only the purchase price of the vehicle is leased.
  • Fully maintained novated lease: The purchase price of the vehicle and its running costs are leased.
  • Fully maintained operating lease: Both the purchase price of the vehicle and running costs are leased, and the lessor assumes responsibility for the residual value.

The most popular option is the fully maintained novated lease which is described in more detail on this page. This option covers the following items:

  • Vehicle payments
  • Fuel
  • Insurance
  • Registration fees
  • Tyres
  • Maintenance costs
  • FBT
  • Accident management

A budget of all the estimated running costs in addition to the lease payments are carefully calculated into a simple, convenient monthly payment. This option allows employees to manage all vehicle related costs with a single payment each month whereas a non-maintained novated finance lease does not include a budget for these additional costs.

The employer pays the monthly lease rentals and the employee agrees to forgo a portion of their salary as part of the salary packaging agreement. Fuel and other running costs are then paid for with a card that is provided to the employee.

Fully maintained novated leases are generally available for all full time and part time employees as long as their employers offer salary packaging. Check with your employer to determine eligibility and what other conditions apply. For further assistance, contact the team at Fleet Network for details on getting started with novated leasing.

Tax Implications for Fully Maintained Novated Leases

The employer and finance company can claim an Input Tax Credit (ITC) for the GST included for the monthly lease payments and running costs. These tax benefits are then passed onto the employee which are essentially exempt from GST.

In the event that the employee terminates the agreement or the leasing agreement ends, the GST amount is charged on the residual value which is calculated based on percentages set by the Australian Taxation Office. The employee is then responsible for paying this amount on the residual value.

Fringe Benefits Tax (FBT) is a tax that is levied on the employer for providing non-cash benefits such as novated leasing options to finance a vehicle. This expense is generally passed onto the employee and depends on the kilometres driven each year. One way for employees to maximise their tax benefits and reduce the FBT is to leverage the Employee Contribution Method (ECM).

ECM allows employees to reduce the Fringe Benefits Tax by contributing to vehicle running costs using post-tax income. Every post-tax dollar contributed helps to reduce the FBT by the same amount. Mileage limitations on FBT liability are slowly being phased out as a result of changes implemented by the federal government.

Residual Value

Novated leases must have a residual value to avoid any liability for Fringe Benefits Tax. This is the amount that remains at the end of the lease. The payment is the sole responsibility of the employee and is calculated based on percentages set by the Australian Taxation Office. At the end of the lease, you have several options.

You can:

  • Pay off the residual amount: This option gives you full ownership of the vehicle but also means that all running costs such as fuel and maintenance servicing become your responsibility.
  • Sell the vehicle: Any profits that are made from the sale are yours to keep tax-free. However, any shortfall between the selling price and the residual amount will need to be paid off in full.
  • Take on a new lease: If neither of these options work out for you, you can also opt to refinance the car under a completely new novated lease with similar terms. This helps to give you a great deal of flexibility.

Your employer or leasing company will notify you prior to when your lease ends to discuss your options with you. It is important to carefully consider your options before making any decisions.

Novated Lease Process

The application process for getting started with a fully maintained novated lease is fairly straightforward. The first step is to confirm that your employer offers salary sacrificing. Fleet Network will then negotiate on your behalf to provide a detailed quote for your preferred vehicle including all running costs and expected tax savings. This allows you to see the impact that sacrificing your salary will have on your disposable income.

Once the decision has been finalised, documentation is then prepared to secure the vehicle and complete the finance application. The Deed of Novation and Salary Package Quotation will need to be signed by your employer. Once you take delivery of your vehicle, the deductions from your salary to make payments toward the lease will automatically be made each month.

If you have any questions regarding novated leasing, contact our financial consultants today for more details.

scroll top

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“The vehicle is everything we thought it would be as it’s our third Santa Fe, second diesel. A lot more refined than the earlier model, none the less both Joanna and myself are very happy with it. Right from the start when we spoke with Tim nothing was too much trouble and if there was a query then our contact persons were only too happy to attend to our questions with the utmost professionalism and courtesy. I have passed on to other staff members your company name and hopefully they will be in touch with yourselves in the future.”

Phil , Corrective Services

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“Thanks Jodie, I would just like to say that you have been fantastic with your help through this whole car process and I really appreciate everything that you have done.”

Donna , WA DOCS

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“Can I just say that I love driving my new car. Thank you and your staff very much for your assistance. Ann is so looking forward to meeting with you. We are all going to be driving new cars in this office at this rate. Thanks again.”

De , WA Dept of Human Services

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“Everything is going very well. The whole process was excellent and I am very happy. Thank you.”

Mark , Army

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“Everything is fantastic with my car and the service I have received was great, can’t thank you enough. Thanks Carole, I do appreciate your follow up. Well, so far everything is ok, if I have any queries I will definitely contact you. The customer service was quite good, I was impressed by consistent and up to date communication throughout the process.”

Memory , NT Dept Children and Families

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“This is the third car that I have bought through Fleet Network. I change my car every three years and this time I wanted a VW Beetle convertible, my dream car, and there was only one left in Australia. Fleet Network managed to find the car for me and get it sent over from the dealer over east. They were fantastic. They then held onto it for me while I got my other car ready for exchange, a process that was delayed due to hail damage from the storms. There were further delays as things got held up with the insurance company but Fleet Network was brilliant. They kept me up-to-date with everything and waited while I got it all sorted out. I would definitely recommend them. They are really friendly and helpful and everyone I have spoken to has been brilliant.”

Colleen , WA Health, Western Australia

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“Sasha at Fleet Network was exceeding professional and is really looked after me extremely well!!! My first contact was with Steve Asher and then Frank rang me and worked towards satisfying all my requirements! Would highly recommend them to anyone, which I have already done on three occasions already!”

Kevan , Qld Education

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“This is the third vehicle we have bought from Fleet Network. We keep going back because we get such great service and good value for money from the vehicles we buy. We’ve currently got a Honda Odyssey Luxury, which is a great family car. We always do our own research first and then just call them up and tell them what we want. They source it, give us the price, do all the paperwork and then we just go and pick it up. It’s so simple. The hardest part is choosing the car we want! As to recommending them, anytime we have friends looking for a car we recommend Fleet Network. They’re a good company and everyone we recommend has had a good experience.”

Garry , Department of Indigenous Affairs, Western Australia

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“Yes, everything is going great for this vehicle so please thank Frank Agostino, Vicki Scott, Sasha Carruthers and Tammie Maciejak for all their help.”

Craig , WA Health

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“I would like to say a very big thank you to Sean and Sherren for providing me with really outstanding customer service.”

Karen , WA Transport

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“Your customer service during the leasing process was outstanding, as it was last time. We would not hesitate to lease through Fleet Network again when our lease is up.”

Jason , WA Education

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“I’d like to thank you and the Fleet Network team for the professional and friendly assistance I received throughout the process and renewing my car. The whole team ensured I knew everything that was happening and a special thanks to the lady who I signed the final paper work with on the hand over day, she was so nice. I have since mentioned you guys and the service you provide to a few of my friends and hope that if they choose to go down this path then they will certainly be looked after. Once again thank you all so much, I will see you all again at the end of my lease for a new one, apparently my son will have his licence by then and has already claimed my car.”

Shirley , WA Education

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“I would like to say a big thank you to Sasha who provided me a very valuable service, she has been very patient, friendly and always providing me up dates on my current vehicle on order. I currently work for defence and as you probably do not know our movements can be stressful at times and have requested to have my vehicle delivered to me before the delivery date of December 12. Even though Sasha has been informed by Holden that the said due date will still occur on December 12, she is trying really hard to have this vehicle delivered to me at the earliest opportunity due to my transfer taking place on December 16. Once again thank you and I am looking forward to doing business with you during the course of my lease through Fleet Network and I will highly recommend your company to Defence and to family members.”

Rudsyn , Defence

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“We have a big family and when we first started dealing with Greg from Fleet Network earlier this year he pushed and pushed to get us into a car big enough for us all and one that would work within our budget. He just wouldn’t give up! We now drive a Hyundai iMax, which is perfect for us. We rang him up so many times with questions but nothing was ever a hassle for him. When Greg went on holiday and Jodie took over it was exactly the same – they were phenomenal. They really did go above and beyond what they had to do in order to help us. Would we recommend Fleet Network? We already do recommend them, to everyone. They have been just so friendly and helpful and worked so hard for us. We can’t thank them enough.”

Troy and Karen , State Government Employee, New South Wales

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“I first started dealing with Fleet Network in 2002 when I got in touch and spoke to Matt. I was a bit wary as I had never financed a car this way before but Matt talked me through everything and put me at ease. I told him the things I was looking for in a car and before I knew it he had arrived with a Toyota Corolla for me to test drive. I tested it, he went through the costs, which were almost negligible, and the car has been going beautifully ever since. It’s been passed through the family but Matt was right, it was exactly what I was looking for and has been a great car. Since then I have bought 3 more cars through Fleet Network. I can’t recommend them highly enough – they are really good people, so friendly and they always follow through on their promises. Everyone I know who has dealt with them has commented that Fleet Network really do care.”

Antonio , Department of Education, Western Australia

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“Everything great with my new car. Customer service was excellent was a pleasure doing business with your company.”  

Theresa , NT Dept of Health

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“Jodie and Tim were excellent to work with, they helped me understand exactly what I needed to do and Jodie guided me through the whole experience expertly and patiently.”

Sarah , Dept of Education

SPEAK TO OUR NOVATED LEASE EXPERTS TODAY.

WE ARE DEDICATED TO GETTING YOU THE BEST RESULT.

“Everything is going well with my vehicle, I love it. I am more than happy with the assistance that I received during the process and would happily recommend Fleet Network to others.”

Jo-Anne , QLD Dept of Communities